Many observers sympathetic to the cause of cash transfers by the state, or direct benefit transfers (DBT) as the Indian government calls them, were nevertheless perturbed by the timeline with which the United Progressive Alliance (UPA) government seemed to be rolling out the service. At the beginning of this year, in a series of high-profile events, the leaders of the UPA led Indians to believe that the process of extending DBT nation-wide would be well advanced by the time of the next general election, scheduled for the middle of 2014. Although the plan did not immediately include a shift-over from the public distribution system for food to cash - which will be a controversial and difficult exercise - it nevertheless was so expansive that enough troubles could be foreseen. And yet, they were not budgeted for in the time frame.
That overconfidence is now coming home to roost. As this newspaper reported on Saturday, of the 1.66 million beneficiaries in 43 districts who were supposed to be reached in the first phase of the DBT roll-out, barely a fourth have been the recipients of DBT - about 400,000. The problems are not just in terms of the number of beneficiaries, but they also extend to the number of programmes that were supposed to be covered; only a little more than half of the 25 state schemes that were supposed to operate DBT in the first stage have managed to get their act together. Indeed, Andhra Pradesh, which was specially chosen as a target for the first phase, has been particularly slow. The reason for this, too, is revealing: the state has its own delivery system, and there is local-level and bureaucratic resistance to the Centre's imposition of DBT.
The problems with last-mile implementation of DBT, thus, are vast and larger than the UPA apparently bargained for. However, there is a very real fear that this could have one of two negative effects. The first is that the government, which is worried about its popularity and is facing polls with little to say for itself, will abandon the DBT as unlikely to pay electoral dividends in time. This would be deeply unfortunate, as transfers have the potential to revolutionise the way that Rs 3 lakh crore of subsidies are handed out. Not only that, it is pretty much the only major reform that UPA II could point to as justification for its tenure, whether or not it is working perfectly by the time polls arrive. The other possibility is that its roll-out continues at breakneck pace, with the very real administrative and implementation difficulties papered over at least till the next government's term. That, too, would be dangerous. It could lead to disenchantment among beneficiaries and local-level officials with the scheme, and cause it to lose all effectiveness and political heft. This, too, would mean that its capacity to fix the leaky pipe of government subsidies would go unrealised.
Rather than seeing the DBT only as a method to win the next election, the UPA must realise that it is a structural transformation of the methods of governance and should approach it appropriately. A more realistic and effective timetable must be laid down, and the patient and efficient administrative spadework required must be done.