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Friday, 31 January 2014 02:58
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UPA kills its most impressive scheme, UIDAI

Among the many other unique features of the Unique Identity Authority of India (UIDAI) is that it was both populist and reformist at the same time—in other words, it was a project that could satisfy the Congress party president’s desire to deliver more money in the people’s hands while, at the same time, meet the finance ministry’s needs to cut down on costs. So, with its unique biometric-based low-cost delivery model—it needs just small point-of-sale biometric readers attached to a cellphone—UIDAI’s USP was that it would deliver money straight into the hands of the person it was earmarked for. Given that 40-50%, if not more, of most monies spent on welfare programmes don’t reach those they are meant for, this meant Sonia Gandhi’s UPA would be able to deliver double the benefits it does today. And as social expenditure schemes were expanded, UIDAI would keep their costs down. So, if delivering the grain promised by the Food Security Act was going to cost Rs 2 lakh crore a year, going by the CACP’s estimates, UIDAI would deliver this at a fraction of the cost by ensuring the 40-50% leakages in the system would be stopped. And unlike many other pilots, UIDAI had delivered proof-of-concept in various ways. The fact that it was able to deliver unique Aadhaar numbers to 57 crore individuals while the rival National Population Register has done a small fraction of this shows its model of 3rd-party outsourcing for collecting data works. And in 184 districts, it successfully delivered benefits to 6.6 crore customers and transferred as much as Rs 2,000 crore into their accounts—over 4 crore transactions have been made so far.

Were this to be rolled out across the country, as petroleum minister Veerappa Moily had initially said it would, the benefits would be huge since on a conservative basis, there are around 2 crore fake LPG connections across the country. Among the decisions taken by the Cabinet on Thursday, apart from raising the cap on the number of subsidised LPG cylinders from 9 to 12, the more worrisome one was that the UIDAI rollout has been put on hold for LPG. While lifting the cap is estimated to cost Rs 5,000 crore according to the estimates put out by the government, the Aadhaar decision could cost more than three times as much since 2 crore gas connections will now be given 12 cylinders each year with an average subsidy of Rs 760. Not surprising then, that the NIPFP study on UIDAI in November 2012 said it would deliver an internal rate of return of 53% if PDS, MGNREGA, and various other subsidies were delivered using it. Since NIPFP worked on a very conservative 7-12% leakage number, the real return would be much higher. It’s a pity that the government that made UIDAI happen should be the one to also prevent its use.


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