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Well begun; but needs strengthening

By GovernanceToday
In Cover Story
June 28, 2016
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aadhaarLekshmi Parameswaran

Like the one rotten mango that can spoil a bag full of ripe mangoes, a negative connotation is enough to rob a  word of its meaning. Poverty is one such word that has been reduced to the narrowest definition possible due to the term exploitation associated with it. The world is yet to see poverty as an opportunity for the policy makers to test their own limits and come with solutions that will have far reaching impact. The case in India is no different. Though the legislature and the executive were successful in bringing in policies, corruption slowly crept into the system rendering the entire process meaningless.

But with one policy decision the face of the entire public delivery system was changed in the country. It was the introduction of the Direct Benefit Transfer (DBT) Scheme on January 1st, 2013 by the then ruling UPA government. The idea was to plug the myriad loopholes in the system by transferring the benefits directly to the beneficiaries in their bank accounts. It so happened that corruption and inefficiency at all levels prevented the benefits from reaching the needy, and the poor were often left in the lurch. Cleansing the system from within seemed to be the only solution and DBT looked apt for it. Along with this, the provision to link this scheme with the Aadhaar card which is a 12-digit unique identification number helped ensure its effective implementation. The Aadhaar number given to every citizen of the country based on demographic and biometric identification finally addressed the issues of lack of transparency and duplication in the system.

Why Aadhaar?

ver since the decision was taken to introduce Aadhaar card in 2009, there have been debates over its feasibility. A look at the statistics published by the Unique Identification Development Authority of India (UIDAI) further cements the claims of those who believe that in a country that is as thickly populated as India, Aadhaar might prove to be exclusionary.  While in states like Delhi and Telangana, the enrolment level is over 100 per cent, in states like Meghalaya and Assam, it is less than 5 per cent.  The Supreme Court’s interim orders in 2013 and 2015 stating that no person shall be denied services for lack of Aadhaar number gave the much needed reprieve for all. But what has brought to fore the question of viability of Aadhaar is the passing of the Aadhaar (Targeted Delivery of Financial and other Subsidies, benefits and services) Act, 2016 in the Lok Sabha.

There is no debating the fact that direct transfer of benefits is a much better option than providing subsidies. In a country where exploitation is rampant, there is a dire need to strengthen the system from the grass root level. And the DBT scheme looks to fulfill this purpose. Its role is the biggest and most important in eliminating the part played by intermediaries and middlemen in the transfer of benefits. The earlier scheme of giving subsidies resulted in loss to the exchequer and the citizens alike due to the involvement of multiple people and agencies.

The Public Distribution System (PDS) due to the lack of any accountability had paved the way for several ills. Hoarding and blackmarketing had become the norm with  the  poor at the receiving end of the vested interests involved. Since there was no proper monitoring system, people above the poverty line also had access to highly subsidized goods thus defeating the very purpose of PDS. The low prices at these government outlets also gave rise to unhealthy competition in the market as private players had to deal with the threat of artificially lowered prices.

Muni Darshan, a policy analyst gives his opinion on the issue, “Direct Benefit Transfers have the potential to be a game changer in the quest for inclusive development thought not to the extent being touted in Government circles. If done properly they would be more transparent and direct to people bypassing the bureaucratic hierarchy. Cash transfers, conditional or otherwise, helps to provide more choices to the poor. His/her ‘unfreedoms’ reduce and this can bring about empowerment at local level. It can also provide a more targeted delivery of benefits which will provide savings. The program has also come a long way from the horrors of Kotkasim where it failed miserably”

Is India ready for Aadhaar?

It is an open secret that the first few attempts at direct benefit transfer in India have not yielded the desired results. Here, more than the fault at the implementation level, it is the societal structure that needs to be blamed. The recognition of man as the head of the family meant that money seldom reached the women of the household. More often than not funds were diverted for activities like consumption of alcohol due to which the scheme had come to be viewed with apprehension. The problems of illiteracy and lack of connectivity once again gave middlemen a role to play, defeating the basic idea of the scheme.

Though the Pradhan Mantri Jan- Dhan Yojna was launched with the aim of financial inclusion, it gave rise to another kind of exploitation by the appointed business correspondents. Taking advantage of the ignorance of the masses, the business correspondents saw that as an opportunity to make people open multiple accounts with the same bank. Only a thorough study can reveal if the statistics of 21.74 crore accounts that have been opened under the scheme have actually benefited that many number of people.

“We still lack an independent concurrent evaluation system and we are still dependent on the unreliable Business Correspondent (BC) network for final delivery of the scheme. Doubts are also over its ability to completely replace present subsidy system”, adds Darshan.

aadhaar1Compounding the problem is the hesitation of banks in opening a branch in an area where zero balance accounts are at a maximum. The cost effectiveness of Aadhaar in cases like this is yet to be ascertained.  There is a clear need to carry out a scientific analysis on how Aadhaar can be made functional without compromising on the aspect of governance.

The unique identification number has no doubt eliminated the problems of ghost ration cards, adulteration and leakages. But before it is linked with food security, there is an urgent need to put in place the required infrastructure. Food grains should be made accessible to the population and an ATM should be installed in every village. Also it needs to be noted that the increased inflow of cash will result in inflation. Provisions should be made to keep that strictly under check.

A look into the future

The implementation of Aadhaar linked DBT is still in its nascent stage. Out of Rs 20,000 crores set aside by the Union government for subsidies, only a third of it goes for DBT.  The success of PAHAL which is the direct benefit transfer scheme launched exclusively for LPG makes the future tax evasion. The end goal should be to do away with the multiple identity cards and have just one smart card for all purposes. Only such a step can bring about development in the most comprehensive manner. For long, we have heard of stories of how a one rupee coin erodes in value by the time it reached the poor. It is high time the value of that coin is preserved till it reached the target person; it is that person’s right. The Aadhar linked DBT is a novel mechanism which has started well; it only has to be strengthened to such a level where it can become the primary tool for financially helping poor.

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