The direct cash transfer scheme announced by the government may not lead to an increase in inflation, D Subbarao, governor at the Reserve Bank of India (RBI), said.
"I don't think so. If cash is used for necessary consumption [then] it will be productively spent. I don't think there will necessarily be any implication of inflation on that," Subbarao said while replying to a media query after the central bank's board meeting here today.
The scheme was initially announced by the former finance minister and current president Pranab Mukherjee.
Under this scheme, beneficiaries will get cash in their bank accounts instead of subsidies for food, gas, kerosene and other essential items. The beneficiaries are expected to buy food from public distribution shops using this cash.
The government has recently asked ministries to fast-track the direct cash transfer scheme. A deadline of December 15, 2012 has also been given to state-run lenders to open bank accounts in 51 districts.
Subbarao noted that West Bengal is lagging behind other states in implementation of cash transfer scheme.
"The state government is very anxious to roll out electronic benefit transfer to bank accounts. A lot of states are already ahead of West Bengal," he said adding that not a single district in West Bengal figures in the list of 51 districts that have been chosen for the rollout of direct cash transfer of the subsidies scheme.
He added that from March, 2013 the state government will roll out direct cash transfer scheme in six out of its 18 districts. The scheme will be introduced across the state after successful rollout in the six districts.
