Indian business post : “Direct Cash Transfer Scheme "

General Awareness Topic

“Direct Cash Transfer Scheme : Measure to plug the leakage”

"UIDAI will set up a dedicated cell of technical experts in UIDAI to facilitate Aadhaar enabled Direct Cash Transfers and help individual Ministries."

Recently, Prime Minister formally announced the launch of much-awaited Direct Cash Transfer (DCT) Scheme. The scheme proposes to transfer subsidy amount that is given away by various departments of the government for the poor and the deserving, directly to the bank accounts of the beneficiaries. The scheme is aimed at eliminating fraud, middle-men, black-marketing, and bribery in dispersing of the subsidies. It will be implemented from January 1, 2013 covering 51 districts across 16 States. The scheme will allow the families with Aadhaar card entitled to subsidies, pension, scholarships etc so that money can directly be transferred in their bank accounts. Aadhaar card is an ID card with a 12-digit unique number issued to all the citizens of India (on voluntary basis). It will carry the demographics and biometric information of the holder. Direct cash transfer of subsidies would be done through Aadhaar-enabled bank accounts. Every person is expected to hold a bank account to enable such transfers. Initially, 29 welfare programmes will be covered. To begin with, people entitled to subsidized LPG cylinders will be given money to cover the difference from the market price. The scheme will consider the feasibility of cash instead of food (under the Public Distribution System) and fertilizers, at a later stage. In order to ensure the early implementation of the scheme, Prime Minister has directed all the ministries and departments engaged in transferring benefits to individual beneficiaries to quickly move to an electronic Direct Cash Transfer system, based on an Aadhaar Payment Bridge/ Platform. Government plans to initiate DCT in 51 districts from January 2013, in 18 states from April 2013 and by April 2014 in rest of the country. One of the two key pillars of the scheme is the Aadhaar programme, whose unique identification systems will be used to authenticate beneficiaries of the cash transfer. UIDAI will set up a dedicated cell of technical experts in UIDAI to facilitate Aadhaar enabled Direct Cash Transfers and help individual Ministries. The other key pillar is the banking infrastructure needed to implement direct cash transfers. Department of Financial Services will go for universal Financial Inclusion through individual Bank Accounts for all. The Asian Development Bank has endorsed the scheme saying it helps to reduce poverty as in contrast the food and fuel subsidies, as provided by India, are prone to leakages. Moreover, the government distributes food, fuel, and fertilizer instead of cash, but these subsidies are vulnerable to misuse and leakage. In addition, such subsidies generally cost more, benefit the better-off relative to the poor and are politically difficult to unwind.


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