Millennium Post

Between plan and pocket falls the shadow

The United Progressive Alliance government is launching a massive project to transfer cash to people in lieu of public services, based on the Aadhaar unique identity (UID). It’s rushing to introduce the project on New Year’s Day in 51 districts across India in respect of 34 schemes like old-age and widow pensions, maternity benefits and scholarships—as a step towards extending Aadhaar-Enabled Cash Transfers (AECT) to all social schemes like the Public Distribution System (PDS) for food, healthcare provision, and fuel and fertiliser subsidies.

The UPA evidently believes the project is a silver bullet that will not only help reduce expenditure on pro-poor schemes, but also enable it to win elections. Indeed, Rahul Gandhi told Congress office-bearers on 14 December that getting the ‘revolutionary’ project right will ensure the party’s victory in the next two general elections—just as the farm loan waiver did in 2009. The next day, Delhi’s Congress government launched the ‘Annashri’ scheme to provide Rs 600 in monthly cash support to two lakh families for buying food. And Chief Minister Sheila Dikshit promptly put her foot in her mouth by saying that the Rs 600 would take care of a five-member family’s food needs—when five times more is needed for survival.

To sweeten, promote and sell the controversial UID idea, the UPA is reportedly planning to gift Aadhaar-enabled smartphones worth Rs 7,000 crores to 400 million people, with 100 hours of free talk time and 500 free SMSs, besides free Internet access. This has nothing to do with providing basic necessities—which smartphones are not—but shows an obsession with promoting Aadhaar with pricey freebies. The premise that AECT is a ‘game-changer’ that will instantly raise the UPA’s popularity is fundamentally mistaken. Surveys show that more than 90 per cent of the poor prefer PDS food to cash transfers, which are abuse-prone.

The UID project is fraught with grave technological, administrative and logistical problems. It uses unreliable markers such as fingerprints (which fail to identify people in 15 per cent-plus of cases) and iris scans (which become dodgy with cataracts and other eye problems), and poses serious issues of data security and potential abuse of personal information by state agencies.

UID’s costs are exorbitant—probably Rs 100,000 crores-plus. Even the United Kingdom abandoned the idea. It’s as prone to errors like exclusion (of genuinely deserving beneficiaries) and wrongful inclusion (of undeserving ones) as below-poverty-line (BPL) lists, which notoriously  leave out up to 40 per cent of the poor. The same officials who compile BPL lists under the influence of the powerful will generate UIDs. Each excluded family means at least two lost votes.  UID has no statutory or legal basis. While considering the National Identification Authority of India Bill 2010 (to give legal backing to the scheme), Parliament’s Standing Committee on Finance termed the project ‘directionless’ and lacking ‘clarity of purpose’. It also called the UID technology ‘untested, unproven, unreliable and unsafe’.

Coupling UID with bank accounts or hand-held devices like micro-ATMs through which banking correspondents (BCs) dispense cash to people will enlarge its inherent uncertainties and risks. These devices are dependent on centralised databases, Internet connectivity and reliable electricity supply. But rural areas often have no power for days and supply is erratic at the best of times. The scheme also assumes high integrity among BCs, who may be hostile or prejudiced towards the poor. These problems were highlighted in two districts where AECT pilot projects were launched a year ago. In Ramgarh district of Jharkhand, payment of wages under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was made AECT-dependent. The result has been appalling. The district administration simply couldn’t cope with the workload. The proportion of the population whose UID numbers are matched with their welfare details is less than two per cent. Rural development minister Jairam Ramesh says coverage should be at least 80 per cent for the scheme to become viable.

To receive cash in place of services, people must open bank accounts. But there aren’t enough bank branches. India’s 6 lakh-plus villages have only 32,000 branches. Ramgarh’s lead bank has expediently outsourced Aadhaar-related work to an Information Technology company, which has hired BCs. But the BCs are de-motivated because they aren’t paid on time. So Ramgarh has fulfilled only three per cent of the target for MGNREGA wage payment. In one block in Ramgarh, only 162 of 8,231 ‘active’ job-card holders got paid through AECT. In another block, when fingerprint verification was recently attempted to pay pensions to 45 beneficiaries, it only worked in nine cases. Yet, even they haven’t been paid through AECT. According to the area’s BC, half the MGNREGA workers’ fingerprints don’t match. In one case, reported by a leading Endlish daily, a poor worker tried fingerprint verification 13 times on the micro-ATM and failed. The BC told the despondent man to rub Vaseline or Boroplus cream onto his fingers for three to four days, and then come back!

Lest it be thought that the Jharkhand pilot’s poor performance is primarily attributable to the state’s backwardness and inefficient bureaucracy, another pilot at Kotkasim, a relatively prosperous village in Alwar district in Rajasthan—a relatively well-administered state which records India’s best MGNREGA performance—is an even more dismal failure. A year ago, the government stopped selling kerosene to Kotkasim’s 25,843 ration card- holding households at the subsidised rate of Rs 15.25 a litre and instead charged them the market price of Rs 49.10. The difference was to be deposited in their bank accounts every three months. But the average distance to a bank branch in the area is three kilometres. For many people, it’s 10 km. Therefore, only 13,458 households, or 52 per cent of the total, were able to open bank accounts. The rest were left out of the scheme altogether.

Some households got the first instalment of the difference, but nothing thereafter. Most people have received nothing at all for a whole year. Meanwhile, sales of kerosene have plummeted 94 per cent from 84,000 litres to just 5,000 litres. People have to make do with twigs, cotton and mustard stalks and any biomass that burns as fuel to be used in extremely inefficient and polluting chulhas.

The Kotkasim residents are so angry with the cash transfer scheme for kerosene that they demand it be extended to the whole of Rajasthan so all its people suffer like they do! Similar examples can be cited from other districts where the cash transfer project is being launched. Less than two-thirds of the potential beneficiaries in the 51targeted districts have received Aadhaar identity numbers. But most of them live in 20 districts with a coverage of 80 to 90 per cent. Among the worst performers, ironically, is Nandurbar district in Maharashtra, where the very first UID was issued as long ago as September 2010. Aadhaar coverage there is still 28 per cent.

The government is using these low numbers to panic people into rushing to Aadhaar registration centres even as it prepares to weaken and dismantle the PDS, substitute it with cash transfers, and open up the rural market to private capital. The linking of any cash transfers to Aadhaar is basically misconceived because it will cause enormous disruptions and dysfunctions. A statement issued by a number of thoughtful social scientists urges us to ‘think of an old man who is currently getting his pension from the local post office, but will now have to run around getting his UID-enabled bank account activated and then may find his pension held up by fingerprints problems, connectivity issues, power failures, truant ‘business correspondents’,’ and so on. It makes no sense to make his pension payment Aadhaar-dependent.

It would be even more wrong to substitute cash transfers for food and other commodities supplied through the PDS. PDS-subsidised food is a source of nutritional and economic security for millions of poor families, and has significantly reduced absolute deprivation.

Recent experience points to an improvement in the PDS in many states. It’s possible to further revamp and reform the PDS. We urgently need a National Food Security Act, with a universal, as opposed to a targeted, PDS. (IPA)
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