Direct subsidy: Poor to get cash through banks, ATMs

NEW DELHI: Beneficiaries of kerosene, LPG and fertiliser subsidies will be able to get direct cash transfers through banks, ATMs or even mobile banking after the UIDAI's recommendations to plug leakages in the system are implemented.

Pilot projects for transfer of a direct cash subsidy will be launched in seven states -- Tamil Nadu, Assam, Maharashtra, Haryana, Delhi, Rajasthan and Orissa -- from October, according to the roadmap suggested by the Unique Identification Authority of India (UIDAI).

A comprehensive 70-page interim report suggesting ways to plug leakages in the subsidies was submitted to Finance Minister Pranab Mukherjee by UIDAI Chairman Nandan Nilekani.

"Pilot project will take approximately six months' time and taking into account the experiences which they will gather, they will submit the final report by the end of this year," Mukherjee told reporters.

The report has suggested creation of an IT-drive 'Core Subsidy Management System (CSMS)', which will be able to detect fraud and diversions.

"Beneficiaries can report malpractices to the government directly, making it possible for the government to react in a timely manner," the report said.

The government, through the CSMS, will transfer the cash component of the subsidy directly and in real-time into the bank account of the beneficiaries.

The government spends about Rs 73,637 crore a year on fuel and fertiliser subsidies, but a significant portion does not reach the beneficiaries.