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Activists, academics warn of pitfalls and loopholes

Aadhaar rolled out in 20 districts for 7 schemes

BS Reporter  |  New Delhi 

The Union government today began a rollout of the first phase of the project for direct cash transfer of subsidies, to a little over 200,000 beneficiaries of seven schemes.

A number of academics, activists and others from different walks of life, numbering around 200, sounded a public word of caution on linking the scheme with Aadhaar, the unique citizen identification number.

The government had initially planned to start the project, now formally termed Direct Benefits Transfer, in 43 districts and 34 schemes. It stepped back on the eve of the launch yesterday, as a matter of caution, and restricted phase-I to seven schemes and 20 districts. The latter were chosen for having the highest number of people covered by Aadhaar and having a Unique Identification Number.

Those from civil society , in an open letter on the potential pitfalls, said they supported cash transfers on schemes such as old age pensions, widow pensions, maternity benefits and scholarships. However, they had “serious reservations about the government's rush to link these cash transfers to Aadhar. This is because the linking of these schemes can cause huge disruption, not to speak of exclusion, of those who do not have Aadhaar numbers,'' their note said.

“Think,” goes an excerpt, “of an old man who is currently getting his pension from the local post office but will now have to run around getting his ‘UID-enabled’ bank account activated and then may find his pension held up by fingerprint problems, connectivity issues, power failures, truant ‘business correspondents’, and what not.''

The signatories include economists Bina Agarwal, Jayati Ghosh, Jean Dreze, Ashwani Kumar, A K Shiva Kumar and Reetika Khera. Also, National Advisory Council member Aruna Roy, Praful Bidwai, Ashish Kothari, Medha Patkar, Madhuresh Kumar, Kavita Krishnan, and several others from India and abroad.

The note also expressed strong opposition to the introduction of cash transfers in lieu of food and other commodities supplied through the Public Distribution System (PDS).

They cited reasons such as chances of exclusion due to lack of Aadhaar or lack of access to bank services. Plus, “the banking system is not ready to handle large volumes of small transfers in rural areas''. They also noted the risk of the transfers not being linked to price levels. “Iinflation could easily erode the purchasing power of cash transfers. When the government refuses to index pensions or NREGS wages, how can it be trusted to index cash transfers to the price level? Even if some indexation does happen, small delays or gaps in price information could cause significant hardship for poor people,'' the note said.

Transactions begin
The transfer of cash to bank accounts requires a UID number or Aadhaar, besides a bank account. UID director general R S Sharma said transactions in this regard had begun today. He said beneficiaries were linked to Aadhar; where left out of the linkage, this could be accomplished in a week.

Asked if Aadhaar enrolment was underway in any of the pilot districts today, he said he was not aware of any.

The cash transfer, described by the government as a game changer is expected to cover all development schemes and subsidy-based schemes in a gradual manner. The pilot project covering 20 districts that began today is part of phase-I of the programme and is expected to help th government identify problems and fix these.

Ramesh to speak to UIDAI authorities
Union Rural Development Minister Jairam Ramesh today said as the pace of the just laid out direct cash transfer scheme depended on speedy enrolment of Aadhaar, he would talk to the Unique Identification Authority of India (UIDAI) to speed up things.

"The direct cash transfer scheme is related to Aadhaar numbers. And in some districts the enrolment process is slow. I will speak to the UIDAI authorities," Ramesh said, who ended his three-day visit of Maoist-affected Latehar, Palamau and Garhwa districts covering to and from Ranchi about 700 km, said.

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First Published: Wed, January 02 2013. 00:32 IST