Ahead of the rollout of the United Progressive Alliance (UPA) government’s ambitious direct electronic cash transfer scheme on January 1 next year, Prime Minister Manmohan Singh on Monday directed ministries concerned to work in close coordination, focusing on enabling the poor to open bank accounts smoothly.

Dr. Singh also made it a point to ask the Union Finance Ministry and the Unique Identification Authority of India (UIDAI) to work together to ensure the scheme’s success. “I would expect the Finance Ministry and the Unique Identification Authority to work in close coordination to achieve a collective goal [of financial inclusion],” he said in his closing remarks at the first meeting of the national committee on cash transfers that he heads.

Money will be directly transferred to Aadhaar, or Unique Identification number linked bank accounts of beneficiaries of around 20 central schemes from January 1 in 51 districts of the country. The government hopes this will remove the interface with government officials and minimise corruption. As the Prime Minister put it, “We have a chance to ensure that every rupee spent by the government is spent truly well and goes to those who truly deserve it.”

The UPA is hoping the cash transfer scheme would do for it in the 2014 general elections what the farm loan waivers and the MGNREGS did in 2009.

So far, 12 ministries have identified schemes covering pensions, scholarships, wages under the national employment guarantee programme and subsidised ration to be covered under this scheme. Other ministries will join the scheme when cash transfers are expanded to 18 States by April 2013. The scheme will cover the entire country by the end of next year.

So far the UIDAI has issued Aadhaar numbers to only 210 million people, but half of the rural populace does not have a bank account. “The twin pillars for the success of the system of direct cash transfers that we have envisioned are the Aadhaar platform and financial inclusion. If either of these pillars is weak, it would endanger the success of the initiative,” Dr. Singh said.

To move closer to the goal of financial inclusion, he added, the banking system perhaps needs to integrate the post office network.

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