Direct cash transfer of subsidies through the Aadhaar card would be rolled out in 51 districts across 15 States from January 1, 2013, Union Finance Minister P. Chidambaram announced on Saturday. The scheme would aim to cover the entire country by the end of 2013, he said.

Speaking at the annual Bankers’ Conference (BANCON), Mr. Chidambaram said banks would play an essential role in the direct cash transfer, as every person with an Aadhaar card would be asked to open a bank account to enable such transfers.

Subsidies on LPG, kerosene, pension payments, scholarships as well as payments under MGNREGA and other government welfare programmes would be made directly, he said. “The payments that were done through a complex, layered Byzantine administrative system that were diminished in value by the time they reached their beneficiaries will now be paid directly.”

The Central cash transfer committee, that includes Ministers of finance, women and child welfare, rural development, HRD, labour, petroleum, and fertilizer departments, the Deputy Chairman of the Planning Commission, the Unique Identification Authority of India (UIDAI) chairman and the Cabinet secretary, would meet Prime Minister Manmohan Singh on November 26 to chalk out the intricacies of the roll out, he said. Collectors of the 51 districts will also be called to acquaint them with the process.

“It is a huge test for banks and will start on January 1,” the Finance Minister said. Later in the day, speaking at another event, Mr. Chidambaram said direct cash transfers were set to help the Centre get rid of the burden of subsidies, which it cannot bear anymore. “It has reached a threshold, and now we are converting it into an opportunity,” he said, calling it a “transformational change.”

Asked how the system will work, given that Aadhaar has not reached every village yet, the Minister said: “It will work slowly, district by district.”

Parliament logjam

Asked whether the Opposition has come to a consensus on the FDI issue, Mr. Chidambaram said: “I have had a good meeting with BJP leaders Sushma Swaraj and Arun Jaitley. We are stuck on FDI in retail. Once that is solved, other bills that are pending in Parliament will also be passed.”

Stating that bringing in FDI in retail was the only way to keep a check on the increasing current account deficit, he said, “It is not an option anymore, it is an imperative… ”

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