Direct Cash Transfer scheme begins on low key

Government scales down UID-linked scheme to 248,000 people in 20 districts

By Jyotika Sood
Published: Wednesday 02 January 2013

The government of India’s ambitious project to directly transfer cash to the accounts of beneficiaries of welfare schemes kicked off on January 1 on a rather low key. The government failed to launch the much-hyped pilots in all the 51 districts across 16 states as announced earlier. The government was able to extend Direct Cash Transfer to only seven welfare schemes in 20 districts in six states and three Union territories, covering a meagre population of 248,000. These states and Union territories are: Andhra Pradesh, Delhi, Karnataka, Madhya Pradesh, Punjab, Rajasthan Chandigarh, Daman and Diu and Puducherry.

The scaling down of the pilots was necessitated by the fact that a large number of beneficiaries who were to receive the cash transfers in the 51 pilot districts do not have bank accounts or Aadhar numbers. In November-December last year, Prime Minister Manmohan Singh along with several Cabinet ministers including P Chidamabaram and Jairam Ramesh had announced launch of the Direct Cash Transfer scheme in 51 districts of 16 states from January 1 (See Dash for Cash).

The Centre has also reduced the number of schemes eligible for direct cash transfer in first phase from 29 to seven. What's more, all the seven schemes (see box) would be implemented in some districts and not all the 20 districts in the first phase. The government’s new plan is that the remaining 31 districts would be covered by February 1 and March 1 in two phases.

Details of the direct cash transfer schemes

Name of the scheme Districts/states in which the pilot will start No. of beneficiaries
Post-metric scholarship for SC Students Puducherry, Nawanshahr, Fatehgarh Sahib, Gurdaspur Anantpur, East Godavari, Diu 48,000
Pre-metric scholarship for SC Students                                              East Godavari 24,000
Post-metric scholarship for OBC Students Puducherry, Alwar, Anantpur, East Godavari, Daman, North Goa 105,000
Post-metric scholarship for ST students Tumkur, Wayanad, Harda 4,800
Indira Gandhi Matrutva Sahayata Yojana                                                Dharwar, Puducherry, NW Delhi, Diu, North Goa, Amaravati 55,000
Dhanalakshmi Scheme Fatehgarh Sahib 8,000
Stipend to trainees under the scheme of welfare of SC/ST job seekers    through Coaching-cum-Guidance and Vocational Training Karnataka, Kerala, Haryana, Punjab, Delhi, Madhya Pradesh Rajasthan, Andhra Pradesh, Maharashtra, Jharkhand 650

Direct Cash Transfer is a system where every beneficiary must have an Aadhaar number issued by the Unique Identification Authority of India (UIDAI). The number is issued after taking an individual’s biometrics: fingerprints and iris scan. Once people receive Aadhaar numbers, they can withdraw the money transferred to their accounts through a banking correspondent by authenticating their biometrics on a hand-held device.

At present, the government has restricted direct cash transfer to scholarship schemes only, but over time it plans to transfer all subsidies and benefits through cash. At present, food, fertilisers, diesel, LPG and kerosene have been kept out of the ambit of direct cash transfer. Eventually, cash transfers will be extended to 26 schemes.
An official from the Chandigarh administration said that the pilot districts have been chosen because of their relatively high coverage by banks and UIDAI and that by the year end direct cash transfer will be extended to all the districts of the country. He said that on Tuesday, the Chandigarh administration doled out Rs 46.35 lakh as direct subsidy to 1,384 beneficiaries.

The Planning Commission has, meanwhile, defended the scaling down of the pilot. Its deputy chairperson, Montek Singh Ahluwalia, reportedly said it was good that the scheme is being launched in a phased manner and hoped it would “demonstrate that the technology works".


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