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Divisions Of A Scheme

Magic, experiment or something in between? The media needs to enrich its discourse on the Direct Cash Benefits Transfer Scheme.

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Direct cash Transfer

“People have called it a gamechanger, a revolutionary idea, etc. But I say it is pure magic… With the Direct Benefits Transfer Scheme (DBTS), money released from Delhi immediately reaches the bank account of the intended beneficiary. It is just like magic.”

–          P Chidambaram, Union Finance Minister, inaugurating the 1,000th branch of the State Bank of Bikaner and Jaipur in Jaipur on December 22, 2012 (The Hindu)

“It (the Direct Cash Benefits Transfer Scheme) is not a single jaadu ki chhadi (magic wand). It is an experiment. The world’s largest experiment in administrative reform.”

–          Jairam Ramesh, Union Minister for Rural Development, launching DBTS for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) at Gollaprolu in East Godavari district of Andhra Pradesh on January 6, 2013 (PTI)

If you were following the Raisina Hill grapevine, you would be tempted to view the “magic” phrase in Ramesh’s statement as a not-so-veiled attack on Chidambaram’s “magical” expectations from the Direct Cash Benefits Transfer Scheme. When Pranab Mukherjee had vacated the finance minister’s chair for his Presidential innings in Rashtrapati Bhawan, the rumour mills were working overtime. You were made privy to the Union Rural Development Minister’s letters, with rumours doing rounds that he was posting his prescriptions for an ailing economy to Janpath as well as 7 Race Course as credentials for his claim on the Finance Ministry. As things stand, he heads the same office while Chidambaram got back the office he had been reportedly yearning for – the Finance Ministry. However, the truth could be more bland, and taking such a dig/swipe may not hold. In context of the Direct Cash Benefits Transfer Scheme, both might be right in their own ways, and the truth may lie somewhere in between.

The complete versions of their statements show that both ministers are votaries of the scheme and echo optimism for the scheme. The only point of departure is in the degree of caution that both plead for the full feasibility of the scheme. While Chidambaram has simply asked for patience to help the scheme realise its full potential, Ramesh has placed his riders as cautionary notes for roadblocks ahead. In an assessment bordering on cautious optimism, Ramesh said: “It is the world’s largest experiment in administrative reform. It has problems on the ground. It will have problems with banks, post offices and online connectivity. We have embarked on this. We will resolve these issues as we go along”.

However, the scheme has not gone down too well with a section of National Advisory Council (NAC) members, civil society activists, agrarian experts, economists and public intellectuals. Their note of dissent has been in the public domain for some time now. The Economic and Political Weekly (January 5, 2013) carries a letter signed by a long list of anti-cash transfer voices. Among other things, the letter says:

We oppose the government’s plan for accelerated mass conversion of welfare schemes to Unique Identification Authority (UID)-driven cash transfers. This plan could cause havoc and massive social exclusion.

An impression has been created that the government is all set to launch UID-enabled cash transfers on a mass scale before the 2014 elections. This is very misleading, and looks like an attempt to make people rush to UID enrolment centres. This announcement also diverts attention from the government’s failure to enact a NFSA. The food security bill, very weak in the first place, has been languishing with a Standing Committee for a whole year. Meanwhile, food stocks are accumulating on an unprecedented scale. The need of the hour is a comprehensive NFSA, not a potentially disruptive rush for UID-driven cash transfers.

(Signed by – M S Swaminathan, Bezwada Wilson, Shantha Sinha, Veena Shatrugna, Aruna Roy, Gautam Mody, Jean Drèze, Bina Agarwal, Utsa Patnaik, Amiya Kumar Bagchi, and 198 others).

The binary seems to have got entrenched in media debates on the issue too, predictably on the lines of pro/anti positions. What has been a serious gap in media discourse on this issue is that it has never attempted to educate the public on the implications, regulations and relative merits and limitations of the scheme beyond the pole positions of for/against polemics.

However, there have been examples of some well-informed opinion pieces which have sought to analyse, and then judge, the issue in multiple perspectives. On New Year’s day, economist Abhijit Banerjee’s piece New Day, New Start (The Hindustan Times, January 1, 2013) was remarkable in this respect. His insights into the merits and potential dangers of the scheme as well as into the motivations and mindsets of its advocates and critics is an example of reflective commentary which could enrich discourse on the issue. To sum up his arguments on either side of the divide, here is a capsule:

Advantages:

1.    This to me is one great advantage of Aadhaar. In the end my fingertips and my cornea are mine. No one else will be able to claim that he is me, and I should almost always be able to demonstrate that I am. That means that it is now possible to stop Ram from collecting Raghu’s kerosene, and Raghu not be deprived because his ration card got soaked when the rain came in through the broken roof. Moreover, now that every entitlement can be linked to a single ID, it should be possible to prevent Ram from collecting both subsidised kerosene and LPG cylinders at less than half the market price, given that the law says that no one can have both.

(Like everything else in India, it will not work perfectly. Some will be asked for bribes, though the fact that, unlike in the case of the ration card, they could just go elsewhere to get their number will protect them to some extent.)

Others will be turned away because their fingers don’t print, despite the fact that the Aadhaar rules say that no one can be refused. Sometimes the computers will freeze and the networks will be down, despite all attempts to build in backups. But then the comparison should not be with some ideal system that runs perfectly, but with the extant systems for an ID (a passport or a ration card), which can be infuriating, to say the least.

2.    We are told that people do not like cash – they want food and fuel. I have more faith in actual outcomes. The one study that I know of cash versus food, conducted by the Gandhian trade union SEWA in some Delhi slums, found that a move to cash made no difference in people’s cereal consumption but helped them when they had medical emergencies. There was no effect on consumption of alcohol or other “bads”. Moreover out of 100 people who were switched to cash, only four volunteered to go back to food when offered the choice after six months of cash. However this is one small study, with little pretence of being scientific about controlling other factors that might have changed, and we absolutely need to wait for other, better evidence (there is a study in Andhra Pradesh that is about to announce its results)

Limitations and Potential Dangers

1.    The point is not to treat it as a done deal, a solution to everything that goes wrong in government transfer programmes. Even with Aadhaar we would need to find a way to stop politicians and bureaucrats from putting their friends on the BPL lists. Is there a way to be creative about verifications that make that harder? At a more mundane level, given that there are bound to be glitches, should we not worry about the current push to start using the Aadhaar infrastructure for real government programmes before it has been field-tested through its uses in getting bank accounts and cell-phones? What is the right way to roll it out?

2.    When the Aadhaar infrastructure is in place and working well, which I predict will happen soon enough, would it not become extremely tempting for governments facing elections to start giving away larger and larger sums of money in key constituencies, given that money can be transferred to hundreds of millions of Aadhaar accounts with the press of a button? What stops an explosion of populism?

The Prescription – The Way Ahead

All political parties should agree on a number, some fixed fraction of GDP that can be used for all transfers, cash and non-cash – including the many boondoggles that we offer to the rich. If the government wants to give away more cash, it will have to cut back somewhere else, and perhaps this will persuade it to rein in the more egregious of our transfers to those who don’t need it, such as the subsidy on LPG.

As the state shows some semblance of seriousness in getting its public delivery system in order, media discourse on the issues of welfare schemes, development administration and delivery mechanisms also needs to widen the terms of its engagement with public administration issues. It requires a healthy mix of policy education, assessment and critical inquiry. The year started on one such contribution to the media’s critical landscape. Hope the space expands for engagement with such seminal issues of democratic citizenship.

Anand Vardhan Contact

 

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  • Badari Narayanan

    Nehru’s socialism has kept India a constantly ‘developing and poor’ country. The government fools us into thinking that poverty can be purchased and eliminated by money from the ‘rich.’ Modi’s policy of creating an atmosphere that enables people to emerge on their own without government given crutches (doles) is the right way. CONgress has conned India in 2009 by announcing loan waivers before elections. One can imagine if really poor people could have availed loans and if this waiver would have really benefited them. Having taken the economy into a nosedive through mis-governance, we are now further conned with this ‘magic.’

    • http://www.facebook.com/people/Mukesh-Kamath/100000368847799 Mukesh Kamath

      I agree with u about doles not being a good thing but we have to be realistic. We cant tell the man on the street to hang himself. People still live on peanuts here and many have not yet evolved. I don’t understand why you feel this scheme is a con by congress. It is a straight forward move to save some money and spend it more wisely.

  • Ram

    The direct refund of subside to the consumer is great boon to the Government and big problem to the consumer. The consumer has to find the extra money to buy the product. This may be very difficult for example a middle income family buying Cooking Gas.(Instead of about Rs.500/- they have to find nearly Rs.1000/-) This is not simple at all. On the hand the Government gets the money up front and they have to pay only after 3 months.This time can become more based on the efficiency of the BABU handling the case ( the notorious case worker).

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