The decision of the Central government to introduce from January 1, 2013 direct cash transfer for various social welfare beneficiaries has been described as “game-changer” and “politically revolutionary” step for UPA-II. According to Union Minister for Rural Development Jairam Ramesh such a policy was a promise the Congress party made in its 2009 manifesto. Like the earlier NREGA programme which was also started in a few districts to begin with, the direct cash payout of social sector benefits and subsidies to the beneficiaries will be done in 51 districts across 14 states. The scheme would be rolled out all over the country by 2013-end - just months ahead of the 2014 Lok Sabha polls. While the Congress party may point out that it has nothing to do with elections, yet it does appear to be a political decision aimed to serve the Congress party chances in the coming 2014 Lok Sabha General Election. However it is also true that there is an economic and policy rationale as well on why direct cash transfer makes sense. As pointed out by the Congress party managers, it would help plug leakages and duplication in implementation of social sector schemes and result in savings for the government. The cash amount would be transferred to the beneficiaries' bank accounts linked to their Aadhaar cards. The government is expected to start with scholarships and old-age pension schemes and cover other welfare plans including various subsidies. It is true that this will remove a lot of hassles and bureaucratic red tape besides leaving less scope for corruption and misuse of the numerous subsides on offer.
As with all good programmes, the big challenge will be on its proper implementation. The government will have to make sure that the solution that is being brought about through such progressive measures does not lead to new problems. One should never undermine the ingenuity of the human mind to comprehend ways to find loopholes. For instance when the so called MGNREGS was announced, it was seen as a tailored made programme for the poor unemployed people. However with time, the implementation became a major problem. Huge amount of corruption and fund misuse has been detected. No doubt it may be an improvement from previous progammes but the implementation part still remains a daunting task when it comes to delivery of public services. Programme benefits are not reaching those for whom it is meant or even if the benefit is there, it is scaled down. Similarly with the direct cash transfer, the government will have to ensure proper and timely appraisal.
Interestingly there is a school of thought that believes cash transfers as good in theory but whether it can be a viable alternative to the Public Distribution System (PDS) already in place for many years now. According to a study done, there is reluctance among the poor particularly in areas with a well-functioning PDS. Also there is some doubt whether cash transfer will actually ensure food security. For instance, one argument is that money might be misused or frittered away. So in this case misuse of money may not be at the government level but at the level of beneficiaries themselves. Also where markets are distant, where would people buy their grain or food? Also how will they cope if there is a sudden increase in local food prices? And even if markets are accessible, according to the findings, there were apprehensions, such as a fear that traders might raise prices if the PDS is closed. Similarly, question mark remains about the banking system. There have been bitter experiences when it came to wage payment under the MGNREGS. As such while we should welcome steps to reduce corruption and leakages of welfare programmes, yet at the same time safeguards must be put in place if at all the alternative of cash transfers is to work.
