As the sky reddens in the evening at Pilliyar Kuppam, a nondescript village some 20 km from the centre of Pondicherry, M. Kalaichelvi places a small wooden table in the veranda of her house. Then she brings a POS (point of sale) machine, or micro ATM, along with an assortment of objects — a slim register with names and numbers, an aluminium box with money, some bank account opening forms, a stamp pad, and a pen.

A number is dialled and the micro ATM, the pivot in the last-mile payment architecture of the Direct Cash Transfer (DCT) scheme, connects via wireless to the core banking system of Indian Bank, of which she is the village’s Business Correspondent. Some minutes later, a small group of men and women trickles into her home. After 74-year-old A. Selvaraj swipes his offline smart card on the micro ATM, Kalaichelvi guides his fingers to the glowing red surface of the scanner, which turns an approving green. The machine has recognised him, leading Selvaraj to break into a toothy smile. Kalaichelvi hands him Rs 750 from the aluminium box. “This is from his monthly pension from the local government,” she says.

No long queues

Selvaraj had no bank account until January this year and opened one only after the government announced he could collect his money in this manner. This is the second month he has come to Kalaichelvi’s home to collect his pension. “This saves me the bother of standing in a long queue at the anganwadi to do so. Also, now I can withdraw whatever amount I need rather than my entire pension of Rs. 1,000.”

Not everyone in the 43 districts around the country where the DCT scheme has been rolled out in a phased manner has a happy story to relate. But in Pondicherry district, where around 92 per cent of the 9.46 lakh population has enrolled for Aadhaar cards, the experience is almost uniformly positive.

Beneficiaries have been identified for cash disbursal under a slew of schemes such as old-age pensions and education scholarships. Says V. Shantha, Zonal Manager of Indian Bank, which is the lead bank for the DCT scheme in the district: “The scheme has promoted the savings habit among many villagers.”

Here and in other districts in the country where Business Line reporters fanned out, ordinary people listed out some the advantages. For instance, the flexibility to withdraw the amount needed; the speed of withdrawal and the comfort of doing so at the time of convenience; the absence of illegal ‘service charges’. Speaking in favour of DCTs, K. Annamalai of Seliamedu village near Pondicherry (now Puducherry), says: “Every time I went to the anganwadi , they deducted Rs 50 from my pension towards their services.”

In his reply to the Budget last fortnight, Finance Minister P. Chidambaram said the direct benefit transfer scheme, which he described as “the best way to transfer money directly to the poor”, will be rolled out across the country by the end of the year.

The roll-out so far has been far from glitch-free. Gaps in the infrastructure — such as the paucity of bank accounts and beneficiary lists — had forced the Centre to scale down the DCT scheme from 51 to 20 districts, when it was launched on January 1, 2013. Another 11 districts were added on February 1 followed by a dozen on March 1.

The number of schemes was also whittled down from 34 to 26, a list made up mainly of scholarships to students and stipends handed out to disadvantaged groups by the Ministries of Women and Child Development, Health and Family Welfare, and Labour and Employment. The big ticket items — for example, shifting transfer of food, fertiliser, kerosene and LPG subsidies to the DCT mode — is not even on the drawing board yet.

The pattern of enrolment for Aadhaar cards varies dramatically from place to place. In Kakinada, located in East Godavari, Andhra Pradesh’s biggest district, enrolment is nearly 100 per cent, earning Collector Neetu Prasad and her Joint Collector recognition at the national level.

This is in stark contrast with the tribal district of Nandurbar in Maharashtra, which has lagged behind despite being the first district in the country to start Aadhaar enrolment. Deputy Collector Kundan Sonawane’s admits as much and blames the enrolment agency for the state of affairs. “Now, we have five companies carrying out enrolments. Our main problem here is the lack of machines to capture biometric data and the greater number of beneficiaries under the various schemes,” he says.

Only 33,514 people in the district with a population of more than 13 lakh have received money through their Aadhaar-enabled bank accounts. Many others wait for their Aadhaar cards, including Posi Gavit, who waters the plants at the Collector’s office. As a widow and a tribal, she is a beneficiary, but she has no idea of when it will reach her. “The card will mean a lot for me and my children,” she says.

In Delhi, frail Jamila, a 70-year-old widow of Sultanpuri, is aware of the Dilli Annashree Yojana, under which the State government transfers Rs 600 into Aadhaar-linked bank accounts of the senior-most female member of non-BPL (below poverty line) card-owning families. She says she enrolled six months ago, but hasn’t got the card yet. “I have been making daily rounds to the post office. Now, I have reapplied,” she says.

Schemes for children

In some other places, having a card is of no use at the moment. For instance, at the Abhinav Vidyalaya, in the heart of Nandurbar town, all 893 students have applied and received cards. Although 68 of them are eligible for scholarships under the existing schemes under DCT, the school continues to hand out cheques and cash to eligible students.

A number of schemes cover children. At Kyathamaranahalli, on the outskirts of Mysore, the Srikanteswara Educational Society provides vocational training to boys rescued from hazardous industries and minor girls once employed as domestic help. Eligible for a modest monthly stipend of Rs 150 under the Child Labour Project, this money invariably found its way into the hands of parents. “Now, with the direct cash transfer scheme, parents are forced to open joint accounts and spend the stipend on the children. The school also gets a share to manage their education and help with their daily needs,” says State Bank of Mysore’s M.B. Chinappa, lead bank manager (Mysore district).

The Direct Cash Transfer Scheme is built on three planks — the Aadhaar number, bank accounts for beneficiaries, and the availability of Internet connectivity in rural areas. Problems in the implementation of the scheme largely relate to one or the other of these areas. However, some complain that the drawbacks go beyond mere infrastructure. In north-west Delhi, Rajwati says while almost all the women in her area have enrolled for Aadhaar, the problem lies with identifying the beneficiaries. “We don’t know whom to approach. We hear the local councillor is making a list of beneficiaries.”

Litany of complaints

In Wardha, Maharashtra, there is a similar litany of complaints. The district administration claims it has covered 85 per cent of the population under Aadhaar, thanks to something of a mad rush for enrolment with people believing that having a number will become necessary for delivery of certain essential services such as LPG. But the administration is facing some teething trouble in locating beneficiaries. In seven schemes (excluding the Sanjay Gandhi Niraadhar Yojana), 11,562 beneficiaries were identified. But they were able to locate only 6,164 of them, of which transfers via Aadhaar-enabled bank accounts were done only for 2,050.

Deputy Collector Sunil Ghade, however, is upbeat about the potential of the scheme. “The banks have appointed 136 business correspondents in the district and cash is delivered at people’s doorstep. It has saved a lot of hassle, eliminate the time and cost of travel, sometimes a whole day’s salary when one goes to the bank.”

With so many niggles at the rollout stage, it is not entirely clear how effective the proposed national rollout will be at the end of the year. But the potential of the system, at the theoretical level, is immense. As its proponents argue, it can remove middlemen from the system, prevent the falsification of records, check leakages, and speed up the delivery of money to beneficiaries. Before the launch of DCT this year, Finance Minister Chidambaram estimated it costs the government three rupees to reach one rupee to a beneficiary — the rest being lost in a mire of corruption, waste and administrative inefficiency.

Given this, why is there so much opposition to the scheme in some quarters? One view is that the job of the government is to overcome the existing shortcomings rather than trying to avoid them by introducing a less desirable system. To the argument that direct cash transfers would plug leakages, Aruna Roy, member of the National Advisory Council to the Central government, says: “You can’t penalise the people for the failure of the system.”

But a major reason for the opposition to the DCT scheme is the link to the Aadhaar or unique identity number. The latter has been attacked by civil liberties activists for the risk it poses in compromising privacy; as it stands, the Aadhaar number does not require any information that other government agencies do not seek, but some civil society activists fear that it could be misused, or become the starting point — in the absence of clear laws on privacy and data protection — for an insidious programme to monitor individuals.

There is a scientific objection to UID as well, one that found expression in a recent PIL in the Bombay High Court that seeks to have the scheme scrapped. Drawing from the experience in the United Kingdom, which launched and terminated a similar scheme, the argument goes that the blind faith in biometrics, which yields unreliable results and could undermine the proposed objectives of the UID scheme, is misplaced. Clarifies R. Ramakumar, Associate Professor at the Tata Institute of Social Sciences and one of the petitioners: “The PIL is also to challenge the implementation of Aadhaar without parliamentary approval. The government says that Aadhaar is voluntary, not mandatory. On the other hand, it also says the onus of making Aadhaar compulsory has been left to service providers.”

Activists warning

Lurking beneath these objections is another, more ideological and selective, concern. There is no hard opposition to transferring some entitlements such as scholarships and pensions. The real basis for the antipathy is the apprehension that DCT will subsume the existing entitlements under the public distribution system — replacing such things as foodgrain and kerosene with cash. Food activists have warned that this will have a deleterious effect on hunger and malnutrition, a fear that some ordinary people, particularly women, share. Says Kamala of Sawan Park in North-West Delhi: “Families may end up using the money for emergencies such as health or for extraneous expenditure. What will happen to food and nutrition for the family then?” V. Ponnamal in Pondicherry voices a similar concern: “Our ration card is in my husband’s name and he is a drunkard. If the money is credited into his account for purchase of kerosene, I will never see it.”

In a recent interview to Business Line , Union Minister for State for Consumer Affairs, Food and Public Distribution, K.V. Thomas, said that food items will be the last to come on board the DCT scheme. He said there are a lot of issues to be ironed out before food items are brought into the cash transfer system. The entire system, he said, needs to be cleaned up as there are a lot of lacunae. Dealers in the system are not getting adequate commission and leakage needs to be plugged.

In short, the debate on the DCT scheme covers the gamut of issues — its implementation, its efficacy, its desirability, and its constitutionality. It will be a while before the dust settles on the controversy.

Meanwhile, the Central government, which is banking on DCT being a gamechanger with an eye on the 2014 general elections, is bent on rolling it out all over the country as soon as possible.

The political dividends of doing so, of course, are much less important than the real dividends. In the end, the success of the DCT will be measured by a simple yardstick — its ability to provide benefits to the poor with transparency and with fewer leakages.

(R. Ravikumar - Pondicherry/ Rahul Wadke - Nandurbar/ Anil Urs - Mysore/ Satyanarayan Iyer - Wardha/ Aditi Nigam - Delhi/ K.R. Srivats - Delhi/ R.S. Sarma - Kakinada)

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