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SC order on Aadhaar sweetens cash-for-grain initiatives

Arup Roychoudhury  |  New Delhi 

The Supreme Court order last week on the use of Aadhaar card only for the direct benefit transfer (DBT) and public distribution scheme (PDS) is set to provide a boost to these programmes, with the government planning to speed up implementation of cash transfers for foodgrain subsidy nationwide.

Business Standard has learnt from senior government sources that the scheme to transfer subsidy in cash directly to beneficiaries' accounts, instead of selling them subsidised grain, will finally be launched in Pondicherry, Chandigarh, and Dadra & Nagar Haveli next month.

The scheme might be launched in multiple districts in each state, sources informed. This is clearly a step-up from the earlier plan to launch the scheme in one district per state on a pilot basis.

  • Direct cash transfer in lieu of food subsidy to be rolled out in 3 UTs in September
  • Govt planning to launch scheme in multiple districts across states
  • Earlier plan in June was to launch scheme in one district per state
  • Launch of scheme was deferred pending Supreme Court decision on Aadhaar
  • SC order means DBT is now the most preferable route for future kerosene subsidy reforms
  • Schemes apart from DBT and PDS might see a slowdown in implementation

"The Supreme Court's order gives legal stamp of approval to PDS and DBT. It now provides validity to the Centre and the states to link Aadhaar with the bank accounts and ration cards," said a senior official.

Last week, the Supreme Court had observed: "The Unique Identification Number or the Aadhaar card will not be used by respondents for any purpose other than PDS and, in particular, for the purpose of distribution of foodgrain and cooking fuel such as kerosene. The Aadhaar card may also be used for the purpose of LPG distribution."

Business Standard had reported earlier that by June this year, about 330,000 ration card holders in Puducherry would have received Rs 300-400 a month each in their bank accounts in lieu of their monthly quota of rice, after which the schemes would be launched in other union territories (UTs) and one district per state initially.

However, the government deferred the launch of the scheme pending the Supreme Court judgement. Post the apex court's order, the scheme is set to be launched next month and will be expanded at a faster-than-earlier anticipated pace.

The official quoted earlier said that the order also means that DBT will become the most preferred route for the government to bring down kerosene subsidies. However, officials concede that the other schemes where the government was proceeding with linking of Aadhaar, including the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), will witness a slowdown in the process.

"There is now lack of clarity on what this means for other schemes, the ones where Aadhaar was being used in some way or the other, but now the Supreme Court has stated that that is not mandatory. We will meet with the Attorney General to get greater understanding of the judgement," said a second official, adding, "The officials in-charge of DBT in the finance ministry are in touch with the prime minister's office (PMO) and the Attorney General Mukul Rohatgi's office to come up with plans on how best to proceed."

First Published: Tue, August 18 2015. 00:50 IST