Direct cash transfer to take off in union territories first, says Government

NEW DELHI: The food ministry will introduce direct cash transfer instead of subsidised food to poor families through their Aadhar-based bank accounts first in the Union Territories, a top official has said. "The plan will be piloted in Andaman and Nicobar, Chandigarh, Dadra and Nagar Haveli, Daman & Diu and Lakshadweep from April 1 next year," said food secretary Sudhir Kumar.

The government plans to roll out the ambitious cash transfer scheme with 34 programmes from January 1 excluding food subsidy which will be implemented only after the successful execution in the designated union territories.

According to the plan, the government will distribute food grains through the existing network of ration shops. But these shops will not get food grains at the central issue price (CIP) – the subsidised rate at which government provides food grains to poor families. The food ministry will supply food grains to the states at a price close to the prevailing market price.

State governments then supply grains to rations shops after fixing a margin for them. The shop owner will then sell the grains at the price fixed by state governments.

The price difference between the CIP and the rate at which ration shops sell food grains will be transferred to the saving accounts of beneficiaries.

"This is a foolproof mechanism through which we can check leakage in the public distribution system," Kumar said.

He said cash subsidy will be credited to the bank account of the beneficiary one month in advance to enable him to purchase the grains.

"Suppose the CIP wheat is Rs 5 per kg and the selling price is Rs 25 per kg. If a month’s quota of the beneficiary is 10 kg, the government will credit cash advance of Rs 200 to his saving account to enable his purchase. If he is unable to lift his quota from the ration shop for consecutive two months, the grant will be discontinued," he said.

The government allocates subsidised food grains to 6.52 crore poor families providing 35 kg per family per month.

"We will have to write off the subsidy amount if families don’t turn up for two successive months. However, even in that case, ration shop owners won’t be able to sell food grains in black," he said.