Banking infra an issue; 300 districts to be covered by '13

Direct cash transfer of the cooking gas (LPG) subsidy is to be extended to 300 districts across the country by the end of this year.

This expansion from the present 19 districts was decided on Monday at a meeting of a committee of ministers, chaired by Prime Minister Manmohan Singh. They did so due to the "grand success" in this regard of the Direct Benefits Transfer (DBT) project. It appears 2.8 million DBT transactions valued at Rs 116 crore have taken place in seven weeks with the LPG subsidy.

The two-hour meeting was also attended by Finance Minister P Chidambaram, Unique Identification Authority of India Chairman Nandan Nilekani, Planning Commission Deputy Chairman Montek Singh Ahluwalia, and the ministers of health, labour, rural development, petroleum, human resource development, social justice, women and child development and fertiliser. There was a review of DBT in general.

According to sources, while the banking infrastructure was outlined as a challenge, the National Population Register authorities have also been asked to speed the enrolment of Aadhaar in the districts under its purview. DBT, aimed at curbing leakages in the system by enabling welfare payments to go directly into the bank accounts of beneficiaries, was rolled out in 43 districts from January this year. In phase-II of the scheme, started in July, it was expanded to cover a total of 120 districts. However, as reported by Business Standard on July 20,the programme, projected as a "game-changer", is battling various systemic challenges such as lack of banking infrastructure, digitisation of beneficiary databases, seeding of Aadhaar numbers with bank accounts and inter-ministerial coordination issues and bureaucratic bottlenecks.

On July 24, the government shifted the mission director of DBT and his officers from the Planning Commission to the ministry of finance in order to improve inter-ministerial coordination and hasten the roll-out of the ambitious programme, also pegged to be a key political plank ahead of the general elections next year.

Announcing the mission shift to the finance ministry, the government had acknowledged some of the issues. It said the bulk of the work in DBT at the moment was in digitisation of databases, re-engineering of government processes for automating financial transactions, enrolling in Aadhaar and ensuring every recipient has bank accounts seeded with Aadhaar. And, since the re-engineering and automation of financial transactions processes have to be facilitated by the department of expenditure and the opening of bank accounts and seeding these is the responsibility of the department of financial services, it was decided to place the office of mission director within the ministry of finance.

The government spends around Rs 3 lakh crore of welfare payments every year, a significant portion of which doesn't reach the intended beneficiaries due to leakage and corruption in the delivery mechanism.