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Thursday, 18 July 2013 00:00
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UPA can't afford to mess up the LPG direct benefits transfer scheme in Narendra Modi's Gujarat


As a strategy, it is brilliant. What is important, however, is how it is implemented. While the BJP’s prime ministerial hopeful Narendra Modi’s primary campaign message is that the government is inefficient, the government has identified several areas in Gujarat, including Modi’s hometown, to deliver Aadhaar-based payments to those households that have LPG cylinders. So at a time when Modi is trying to get piped gas to households, imagine the impact of them getting cash for gas cylinders delivered directly into their bank accounts.


That’s the hope. If things go on as they are today, it could badly backfire. Despite the fact that LPG is distributed country-wide by 3 central government-owned PSUs and most banks are owned by the government, the first phase of the direct benefits transfer (DBT) in LPG hasn’t been too successful. In the first 6 weeks after its launch in 18 districts on June 1, DBT in LPG has been able to complete just 2.28 million transactions covering only 1.25 million LPG households who got a total of R91 crore—this is against the target of covering 7.56 million households. The reason for the failure is also known. Another review meeting of DBT last month found that public sector banks were not too keen to open bank accounts for DBT payments as they earned nothing from it—not having enough money to incentivise banks to open accounts is clearly a critical flaw in the project design. The government would do well to fix this quickly, otherwise it will give Modi another reason to scoff at it.




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