UPA's cash transfer scheme: Game changer or hype?

It's been described variously as a "game changer", a policy that could well frame the political debate for the next elections. The government claims its direct cash transfer scheme would help millions of students, the elderly and women community workers in villages to receive their monthly honoraria in time. Critiques have termed it "hype and an attempt to fool the people".

The scheme, expected to cut down leakages and corruption in the implementation of various social sector schemes, rolls out in 51 districts in 14 states of the country on Jan 1, 2013, and will cover all the country's 640 administrative districts by end-2013 - just months ahead of the 2014 Lok Sabha polls.

The significance of the move for the Congress can be gauged from the fact that the party's de facto number two - Rahul Gandhi - who now heads its poll coordination panel, would address a meeting of the Congress committees of the 51 districts where the scheme is to begin.

Prime Minister Manmohan Singh has asked nine ministries to immediately operationalise the scheme, including opening of beneficiary bank accounts and linking these with Aadhaar numbers of the Unique Identification Authority of India (UIDAI).

The prime minister has said that direct cash transfers were becoming possible via innovative use of technology and the spread of modern banking across the country to cut waste and leakages in order to better target the beneficiaries.

"It will be a game changer," Finance Minister P. Chidambaram said, adding: "It has nothing to do with elections."

Congress spokesperson Rashid Alvi said: "The poor will get their due to the scheme. If a party does something for public good it is always helpful. "

But criticism has already started.

While the BJP has complained to the Election Commission over the timing of the announcement with the Himachal Pradesh and Gujarat assembly polls in November-December, the Left has dubbed it as a bribe to the voters.

"The states where elections are due should have been excluded. They (government) could not have done it under the (election) code of conduct," BJP leader LK Advani said after meeting Chief Election Commissioner VS Sampath.

"It is more of hype and an attempt to fool the people. The question is: game changer in whose favour," CPI(M) leader Brinda Karat asked.

"What the government actually wants is to cut subsidies meant for the poor and use Aadhar numbers even as UIDAI bill is pending parliament's approval," she said.

The government has identified 42 welfare schemes under various ministries to be brought in the cash transfer system gradually.

Though it has begun with scholarships, old age pensions, and anganwadi worker honoraria, the government has not touched the controversial areas of food and fertiliser subsidies at present.

Chidambaram clarified that "complex" issues like food, fertiliser and cooking gas cylinder subsidies would be taken up later only when the government is more confident and the bottlenecks in the implementation of food and fertiliser subsidies have been addressed.

Rural Development Minister Jairam Ramesh said beneficiaries who can't travel to the bank would get the facility at their doorstep through an expanded network of banking correspondents.

"It is apolitically revolutionary step. It was a promise we made in the 2009 manifesto," said Ramesh.

"Banking services in rural areas have to be first made more accessible," said Brinda Karat.

The cash transfer scheme is expected to reap rich electoral dividends in the same manner as the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) worked for UPA-I.

Karat said the government should not plan to use Aadhar numbers for payment of MGNREGS wages, as delayed payments through bank accounts is a big problem being faced by the poor.