By Ram Sewak Sharma
On Thursday, the government introduced the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill, 2016, in the Lok Sabha. This rightly aims to firm up the use of Aadhaar for targeted government subsidies.
There is a broad consensus now that the direct benefits transfer (DBT) is the way forward to implement welfare schemes. While the Centre has successfully implemented DBT with regard to LPG subsidy, many states have adopted DBTs in their own programmes. Uttar Pradesh recently introduced DBT in seed distribution.
The truth is in there
In most cases, Aadhaar is being used, and rightly so, as a common identifier to transfer subsidies to the beneficiaries. But there are cases where DBTs are being implemented without Aadhaar. The assumption may be that Aadhaar is not really needed for DBT, and any system where the benefits flow directly to the bank account of the beneficiary is good enough. This is a fallacious view.
A successful DBT model requires perfect integration of two service delivery platforms: welfare schemes and banking services. This integration can be done either when two systems directly talk to each other, or both latch on to a common platform (indirect coupling).
In case of direct coupling, the beneficiary database will have to have the bank account details of beneficiaries for money transfer. It looks easy to implement. But on a scale involving many delivery domains, it may prove to be cumbersome.
With the number of beneficiaries in millions, there have been two main challenges: to eliminate duplicates and ghosts, and to ensure hassle-free transfer to the intended beneficiary. There is no ID system in the country that can ensure uniqueness except Aadhaar. The only identifier, therefore, that can meet the challenges has to be Aadhaar.
Suppose a certain Ram Kumar Tomar is a beneficiary of three subsidies: LPG, PDS and MGNREGA. Without Aadhaar, he has to provide bank account details to each of the systems. The disadvantage of benefit systems collecting bank account details is that middlemen start gaming the system: money going into somebody else’s account and also money going to one account.
However, if he uses an Aadhaar-linked account, all the benefit systems can transfer money to him using Aadhaar as the financial address and the National Payments Corporation of India (NPCI) as the national payment switch ensuring transfer to the correct beneficiary. He does not need to share his bank account with any beneficiary system. This is being done in LPG-DBT at a massive scale.
The Aadhaar-based common identity platform not only takes care of duplicates and fakes, it also provides an easy and convenient way for the beneficiaries. This identifier becomes a common language across all systems.
Since various government departments are already seeding Aadhaar in their databases to remove fakes and duplicates, there isn’t any need to have separate databases seeded with bank account details.
As it is, seeding account details is cumbersome as different beneficiaries may have accounts with different banks and the department may end up engaging multiple banks for requisite data.
Also, the probability of data-entry errors in account details is quite high as these are long alphanumeric numbers. Once there is an error, the onus of getting it rectified is on the beneficiary. And we know it may take ages. But entry errors using the Aadhaar platform are minimal because of the check digit used in the Aadhaar numbering system.
Aadhaar-based DBT ensures better targeting of subsidies. If a resident avails of both kerosene and LPG subsidy, the government may choose to offer just one or both depending on the need.
Similarly, if someone gets scholarship under two different schemes — say, under a minority and a meritcum-means scholarship programme — requisite corrective action may be taken. Aadhaar also provides transparency and traceability.
An auditor has digital access to end-to-end movement of money from the government to the bank of the beneficiary to ultimate withdrawal, all of which are linked. If this link is not there in the accounts, it will be very difficult to establish the end-to-end usage of these funds.
Kerosene subsidy disbursement in Kotkasim in Rajasthan undertaken a few years ago was not successful because of the absence of a common identifier. It is better, therefore, to implement any DBT scheme with some homework rather than going ahead hastily and then blaming it on the DBT.
Last year’s Economic Survey and Union Budget talked about JAM — Jan Dhan, Aadhaar and Mobile — for improving fiscal prudence and bringing efficiency in the delivery system. The powerful JAM trinity can be transformational in its impact. For that to happen, correct usage of all the three is crucial.
Resorting to shortcuts is bound to yield very little. Once compromised, it may be difficult to improve the system later. So, by pushing for the Aadhaar platform for firming up DBT, the government is doing the right thing.
(The writer is chairman, Trai)
DISCLAIMER : Views expressed above are the author's own.
