Yogima Sharma, ET Bureau Jul 13, 2015, 05.53AM IST
NEW DELHI: The Centre plans to soon rank states and union territories on their readiness to roll out direct benefit transfer scheme for all subsides, an attempt to put systems in place to speedily replace subsidies on products with cash benefits across the country. The move to come up with a ranking is aimed at generating awareness among states and union territories to help them plug the gaps in the delivery system and spurring competition among them to vie for the top slot, officials said.
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This will be the second such grading of states within a year of the BJP-led NDA government, which assumed office in May last year. The Department of Industrial Policy and Promotion has decided to rank states on the basis of ease of doing business, the first report on which is expected soon.
A senior government official told ET that the DBT Mission, based in finance ministry, has entrusted the task of preparing a DBT Readiness Index to the National Council of Applied Economic Research (NCAER).
The emphasis is initially on food and kerosene subsidy, which is currently being provided through the public distribution system, and eventually the fertiliser subsidy.
The states will be ranked on the basis of three indicators - policy and incentive framework, availability of soft and hard infrastructure, and the ability of the state to the official, requesting not to be named. "Product-based subsidy distorts the product market and leads to inefficiencies of economics. Hence cash transfers will be here in five years instead of product subsidies and Aadhaar, which has survived the political change, has created the platform for the government to roll out direct benefit transfers for almost all subsidies," Shekhar Shah, director general of NCAER, had said at an event on direct benefit transfers organised by United Nations Development Programme.
It is estimated that 89 per cent of all beneficiary data is digitised. However, its seeding with Aadhaar is extremely low, at just 10-15 per cent, which restricts the ability to roll out DBT for food subsidy across the country.
"Having successfully covered LPG, DBT is now evolving around food and kerosene as the database is almost the same for the two. We are in talks with states to complete all linkages by September so that they can fully migrate to DBT for public distribution system by December," another senior government official said.
The government's expenditure on account of subsidies increased 22 per cent a year on average over the past 10 years, from Rs 48,000 crore in 2005-06 to Rs 2.61 lakh crore in 2014-15.
The DBT scheme, rolled out by the erstwhile Congress-led United Progressive Alliance government, aims to directly transfer the cash benefits into the beneficiary accounts linked to Aadhaar, thus plugging the leakages. It will soon be used to transfer food subsidy directly in union territories Puducherry, Chandigarh, and Dadra and Nagar Haveli.
