Riddled with corruption scandals and financial challenges, the United Progressive Alliance (UPA) Government at the Centre is coming up with direct cash transfers to reach out to below poverty line (BPL) families.
Encouraged by academic studies that such schemes have helped Governments in various countries retain power, Congress insiders think the scheme will work wonders for the alliance in the 2014 general elections and several State Assembly polls scheduled in 2013.
The Prime Minister will announce the scheme’s modalities at a meeting of the National Committee on Direct Transfers chaired by him on Monday. A background note, accessed by
Minutes story
The Government, according to the minutes, will constitute a Ministry-level implementation committee with representatives from the Plan panel, financial services, expenditure, IT and UIDAI. Ministries have been asked to prepare a list of schemes that will be moved to direct cash transfers. This will include specific products such as food, fuel, agriculture inputs, power, books, scholarships etc.
The scheme will be launched in 51 districts with adequate financial inclusion and Aadhaar penetration from January 1. Later, it will be implemented in 18 States from April 1and rest of the States subsequently.
The background note cites the success of implementation in countries such as Brazil, Mexico, several Asian nations and select states in the US.
Study
Interestingly, a recent World Bank study points out that ‘conditional cash transfers’ helped the Government in Colombia to retain power in 2010. The study said during the 2010 Presidential election, voters covered by Familias en Accion, an anti-poverty scheme, not only voted more often, but also expressed a stronger preference (around 2 percentage points) for the official party that implemented and expanded the programme. “A possible explanation… is that beneficiaries value the program given the benefits documented in the literature, and respond to these positive policy outcomes at the polls,” the study said.
Meanwhile, the Aadhaar Bill has yet to get Parliament nod. The Government is likely to face stiff opposition during its passage as a Parliament panel had rejected the Bill. Without Aadhaar, the cash transfer implementation may fail. Lack of banking facilities in rural areas may also impede implementation of the Prime Minister’s pet scheme.