Direct Cash Transfer Scheme

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What’s making news?

On November 26, Prime Minister Manmohan Singh formally announced the launch of much-awaited Direct Cash Transfer Scheme. The scheme proposes to transfer subsidy amount, that is given away by various departments of the government for the poor and the deserving, directly to the bank accounts of beneficiaries. It will be implemented from January 1, 2013 covering 51 districts across 16 States. The Congress terms the scheme as revolutionary and game-changer, while opposition and Left have their own share of criticism.

What’s the scheme all about?

Families with Aadhar card, entitled to subsidies, pension, scholarships etc, will get money directly in their bank accounts. Direct cash transfer of subsidies would be done through Aadhaar-enabled bank accounts. Every person is expected to hold a bank account to enable such transfers. Initially, 29 welfare programmes will be covered. According to government sources, it would consider the feasibility of cash instead of food (under the Public Distribution System) and fertilizers, at a later stage.

What is Aadhaar scheme and card?

Aadhaar card is an ID card with a 12-digit unique number issued to all the citizens of India (on voluntary basis). It will carry the demographics and biometric information of the holder. Payments of Mahatma Gandhi National Rural Employment Guarantee Act ( MGNREGA) wages are being done using this card.

Who’s Who?

A high-power National Committee on Direct Cash Transfers was constituted by Prime Minister Manmohan Singh. The members of the Committee are Prime Minister (Chairperson), the Union Ministers for Finance, Communications, Rural Development, Social Justice & Empowerment, Human Resource Development, Tribal Affairs, Minority Affairs, Health & Family Welfare, Labour & Employment, Petroleum & Natural Gas, Chemicals & Fertilizers, the Deputy Chairman, Planning Commission, MoSs for Food & Public Distribution and Women & Child Development, Chairman, UIDAI, the Cabinet Secretary and the Principal Secretary to the PM (Convenor).

Why is it being done?

This system is aimed at eliminating fraud, middle-men, black-marketing, and bribery in dispersing of the subsidies.

How are the critics reacting?

Critics point out to the practical shortcomings of the scheme. Only 21 crore people have been issued Aadhaar cards so far. Accessibility to banks in remote villages is still a problem.

The CPI (M) criticised that cash transfers instead of goods will cut subsidies, since the cash to be transferred will not cover the increasing costs of subsidised food grains.

Arvind Kejriwal's Aam Aadmi Party (AAP) described the scheme as a bribe to voters. It is aimed at 2014 Lok Sabha election, it feels



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