Brief About Direct Cash Tranfers

7/28/2019 Brief About Direct Cash Tranfers

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Direct cash transfers

(Apka Paisa Apke Haath)


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the launch of the government's ambitious and gamechanging Direct Cash Transfer (DCT) scheme Jan 1,2013.

, that reviewed the preparedness so far and discussed indetail how direct transfers of benefits in the 34

identified schemes in the 43 districts initially selectedwill be implemented by the fixed timeline.

It asked the ministries to follow a "camp" approach tofast-track enrolment of beneficiaries under the Aadhaarscheme.

The ministries concerned were also asked to ensure thatthe beneficiaries have bank accounts in which Aadhaarnumbers will be mentioned.


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The Planning Commission will organise a video conference

with district collectors, chief secretaries and financesecretaries of participating states to assess theirpreparedness for the roll-out.

the prime minister said the government is rolling outAadhaar-based services rapidly so that funds forscholarships, pensions, health, wages and many otherbenefits are transferred directly to the individuals who requirethem.

The scheme aims at disbursing money for welfare schemeslike those for pension, scholarships and healthcare to bedirectly deposited into bank accounts of beneficiaries in a bidto curb delays and leakages and is slated to become a pan-India operation by the end of 2013.


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The prime minister had said that direct cashtransfers were becoming possible via innovativeuse of technology and the spread of modernbanking across the country to cut waste and

leakages in order to target the beneficiaries better.

the prime minister said the government is rollingout Aadhaar-based services rapidly so that funds

for scholarships, pensions, health, wages and manyother benefits are transferred directly to theindividuals who require them.


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This will reduce leakages, cut down corruption,eliminate middlemen, target beneficiariesbetter and speed up transfer of benefits toeligible individuals. It will, at one go, bring in

crores of people into our banking system andmainstream them into our economy,"

We have a chance to ensure that every rupeespent by the government is spent truly well andgoes to those who truly deserve it.


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In the new system every beneficiary needs anAdhaar and a bank account to avail the variouswelfare schemes.

In three years the government has issued about

280 million Adhaars that still leaves 800 millionAdhaars to be issued before April 2014

So far, enrolments have focused on urban andpopulation-dense areas. As the authorities go

further into rural areas where most beneficiaries ofwelfare programmes reside where by the pace ofenrolments might be slower.


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As per the Present status stated by Reserve Bank ofIndia, noted that only 40% of Indians have bankaccounts. Once again, most who don't reside invillages and have a greater imperative for cash

transfers. According to Harun R Khan, also an RBI deputy

governor, about 188,000 villages had bankingconnectivity in June 2012. India has about 700,000

villages. Inorder to tackle this problem the government has

reportedly handed electoral rolls to PSU banks, andtold them to ensure that every household in these43 districts has at least one bank account.


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Saral Money, a prepaid card tailored for cashtransfers launched yesterday in the National CapitalRegion, also targets banking access.

the RBI eased procedural norms for opening bank

accounts. It said that Aadhaars and job cards of theNational Rural Employment Guarantee Scheme(NREGS) can be used as address proof for openinga bank account


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Money coming into the bank accounts ofbeneficiaries verified by Aadhaar is one half of thecash-transfer architecture. The other half is howbeneficiaries withdraw that money.

The question acquires greater relevance for thosewho have don't have access to bank branches orATMs, and rely on roving agents, called 'bankingcorrespondents.

This May, the department of financial services (DFS)

in the finance ministry, announced a plan to splitthe country into 20 clusters for BCs. Each clusterwas to be managed by one BC company, to bechosen by a price-based auction.


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It now appears the last mile will be based on analternative model proposed by the Nilekani panelon micro-payments a network of 1 million micro-ATMs (portable handheld machines, like credit card

readers wherein when a person in a village wants towithdraw money from his account, he will approacha BC in his area and give his fingerprint on amicro-ATM. The fingerprint is verified instantly andthe BC pays the person.


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Sen believes exclusion is happening in areaseven where the pilots are showing a declinein leakages. Exclusion can happen if any ofthree details of a person are not in place: an

Aadhaar, a bank account, and the person'sname in the programme rolls. There is a possibility that the UIDAI does not

necessarily cover all people in a locality and

because people may have Aadhaar but notproof of eligibility for the scheme "like a BPL(below poverty line) ration card.


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A large chunk of India's welfare programmes likeold-age and widow pensions, Indira AwaasYojanaare targeted at BPL households. Toidentify the poor for welfare programmes, thegovernment relies on periodic surveys of poorer

households. The last BPL census was done in 2002. Over the years, as successive governments linked

more and more welfare programmes to the BPL list,relatively affluent households have elbowed thepoor aside, and pushed their way into these lists. In2009, a panel led by NAC member NC Saxena hadestimated that only 39% of households assessed as'poor' had a BPL card or an antyodaya card.


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Conclusion

The scheme has received mixed response from the people.

According to a survey conducted , only about 10-15 % people

prefer cash transfers to their bank accounts. They believe its

better to have goods and other facilities available at

subsidized rates rather than cash.

I can see why, barring the above mentioned challenges,

people are simply not sure on how much time it can take for

cash to be available in their accounts, they do not want to be

in a situation where they have to buy LPG cylinders at Rs 850only to be refunded the subsidized amount 1 year later.

Thus, government has to win over the confidence of the

consumer and successful pilot projects can go a long way in

instilling that confidence.

Documents

Brief About Direct Cash Tranfers