PM Manmohan Singh directs cash transfers for social welfare schemes

NEW DELHI: Prime Minister Manmohan Singh has taken charge of the UPA's initiatives to directly transfer welfare benefits and subsidies into individual beneficiaries' bank accounts - a system that would plug the rampant leakages of funds earmarked for the poor via schemes such as NREGA on which the government spends over 3,00,000 crore annually.


A new ministerial co-ordination committee under the PM would now fast-track the architecture for cash transfers while bringing multiple ministries on the same page for the implementation of direct electronic transfers for the entire population. Success on this front could be critical for the UPA ahead of the 2014 general elections, with the likelihood of a positive impact on millions of beneficiaries.

Moving from the present paper-based, cash-driven system to an electronic direct transfer system 'would improve targeting, reduce corruption, eliminate waste, control expenditure and facilitate reforms', a statement from the PMO said on Friday. The government aims to put everything from NREGA wages, scholarships, pensions, income support and health benefit schemes as well as other subsidy programmes under the new system.

The Prime Minister hopes to leverage Aadhaar numbers for delivering cash benefits directly to the poor and has included Nandan Nilekani who heads the Unique Identification Authority of India ( UIDAI) in the ministerial panel.

Cabinet ministers in charge of finance, petroleum and natural gas, food, fertilizers, health, labour minority affairs, human resources development, social justice and information technology, will also be part of the committee.

The UIDAI, which completes two years of operations on September 30, has captured the biometrics of 20 crore residents so far and has been given the mandate to issue unique identity (Aadhaar) numbers to another 40 crore people.

The home ministry-run National Population Register has the mandate to capture the identities of the other 60 crore Indian residents. Once these exercises are complete, it would be possible to move to a system of transferring cash benefits directly to the poor, the PMO said.

The PM's leadership is expected to ensure that duplication of efforts is minimal and individual ministries such as finance, labour and posts that have been working on different architectures and technological platforms for direct cash transfers, start pulling in the same direction.

Several pilot projects for direct electronic cash transfers are already underway with 'encouraging' results, the PMO statement said.

"The government and the Reserve Bank of India have issued guidelines to banks for implementation of electronic benefit transfer. Pilots are under implementation, including in AP, Chhattisgarh, Punjab, Rajasthan, TN, WB, Karnataka, Puducherry and Sikkim," the communique noted.

Apart from the ministerial panel, a national executive committee on cash transfers has also been created with secretaries of all concerned ministries. At the implementation level, two mission-mode committees have been created focusing on technology and financial inclusion. A 'cash transfer mission - electronic benefits transfer' committee would be set up for each ministry that oversees welfare schemes.