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Wednesday, 02 January 2013 02:02
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Using Aadhar to cut subsidies still a long way off


Though the government has substantially scaled down the Aadhar-based direct benefit transfer (DBT) scheme to delivering just 7 scholarships to 200,000 beneficiaries across 20 districts in 16 states from January 1—DBT for 26 schemes is to be launched in 11 districts from February 1 and in 12 more from March 1—this represents an important beginning. And will go a long way in convincing sceptics that the scheme works. Critics have, in the past, used isolated examples, including from cash transfer schemes that were not based on Aadhar’s unique ID system, to argue the model doesn’t work. In other cases, axiomatic assumptions were made that those getting Aadhar-based cash transfers would simply drink the money away. While the results of the Aadhar-based DBT will have to speak for themselves, it has to be recognised that Aadhar is only a payment-enabling mechanism, though a very sophisticated one, with no parallel anywhere in the world. Aadhar can only ensure the person getting a benefit is matched to a unique set of biometrics, but whether this person is rich or poor is something only the concerned project authorities or the local administration can determine. So if the non-poor get cash transfers using Aadhar, let’s not blame Aadhar for it.

Though some pilot projects are to be done for food subsidies in some union territories, the fact that Aadhar-based DBTs are not being used to distribute any major subsidy is unfortunate and represents a wasted opportunity. If DBTs are not used for major schemes like food and fertilisers or kerosene, the chances of this being done later, in the run-up to the elections, look a bit weak. More so since, despite there being enough studies to show a 30-40% leakages in grain transfers through PDS, the government is finalising the mother of all PDSs called the Food Security Bill. That pushes the use of Aadhar for cutting subsidies to the next government. Whether the new government will use Aadhar to cut huge leakages in subsidies remains to be seen—that depends on whether, like the UPA right now, it is under severe pressure to move on critical reforms.


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