NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News  » Business » Is government rushing Aadhaar cash transfers?

Is government rushing Aadhaar cash transfers?

Last updated on: December 11, 2012 14:45 IST

Aadhaar is a novel and transformative reform; it must not be allowed to get a bad name early on - like, for example, disinvestment. The government, however, needs to address lot of issues to make it a success.

After eight-and-some years of minimal, marginal and timid reform, the United Progressive Alliance (UPA) suddenly seems to have discovered the possibility of fixing welfare delivery through cash transfers and the Unique ID system, and has pushed for a rapid roll-out of the Aadhaar framework.

It is due to be "rolled out" by January 1 - more precisely, as Planning Commission Deputy Chairman Montek Singh Ahluwalia said, the digitisation of the databases for some schemes in some districts will happen over January.

Within six months, the government claims most of the 29 schemes that are part of the initial Aadhaar framework will work in most of the selected 51 districts.

These are ambitious time frames, especially when it comes to the formidable scale of the enterprise - grafting existing welfare schemes onto a completely new transfer framework. Given the track record of the UPA when it comes to administrative reform and management, a certain amount of scepticism is to be expected.

No roll-out of something so revolutionary will be glitch-free; but there is every chance that some major problems will be reported. After all, some of the central questions about Aadhaar remain to be resolved, and depend on middle-level administrative machinery.

Identification is not yet perfect; nor is the authentication machinery. Banking penetration is still minimal, keeping the whole "cash in bank accounts" narrative imaginary at this point.

And, most importantly, questions of inclusion have not been solved. The central promise of Aadhaar, that it would be easy to enrol, has been betrayed by the insistence on various forms of address proof and so on at most local-level


Given these holes, it is entirely possible that a speedy roll-out of Aadhaar-based transfers will cause considerable protest among those excluded.

Let there be no mistake: cash transfers can empower the beneficiaries of welfare and permit better targeting of funds and greater accountability.

It is precisely because of the importance of the cash transfer alternative that mistakes in an early stage should be avoided as far as possible, not invited in with open arms.

This is novel, transformative reform; it must not be allowed to get a bad name early on - like, for example, disinvestment. And while it is capable of, in the medium to long term, helping the government address a host of issues related to accountability, leakages and efficiency, it is not the magic bullet it is sometimes described as, either.

Its effectiveness at the last mile will still depend on how well administration at that level implements it and how effectively the government curbs the temptation to add more subsidy schemes without keeping a check on its fiscal deficit.

In other words, the UPA cannot sit back and expect that Aadhaar-based payments will, by themselves, reform service delivery. Several other reforms are needed.

Some, like the various state-level laws bringing in accountability for state service providers, are legislative in nature. Others require structural change, such as the devolution of power to aid political accountability at the local level.

In the absence of such reforms, there is every fear that transfers, however quickly they may be rolled out in 2013, will remain limited to scholarships and other relatively small welfare payments.

The big guns - food, fuel and fertiliser – must be reformed too. But speed and complacency will not aid that process.

Business Standard in New Delhi