Praful Bidwai
The United Progressive Alliance Government is launching a massive project to transfer cash to people in lieu of public services, based on the Aadhaar unique identity (UID). It’s rushing to introduce the project on New Year’s Day in 51 districts across India in respect of 34 schemes like old-age and widow pensions, maternity benefits and scholarships-as a step towards extending Aadhaar-Enabled Cash Transfers (AECT) to all social schemes like the Public Distribution System (PDS) for food, healthcare provision, and fuel and fertiliser subsidies.
The UPA evidently believes the project is a silver bullet that will not only help reduce expenditure on pro-poor schemes, but also enable it to win elections. Indeed, Mr Rahul Gandhi told Congress office-bearers on December 14 that getting the “revolutionary” project right will ensure the party’s victory in the next two general elections-just as the farm loan waiver did in 2009.
The next day, Delhi’s Congress Government launched the “Annashri” scheme to provide Rs 600 in monthly cash support to two lakh families for buying food. And Chief Minister Sheila Dikshit promptly put her foot in her mouth by saying that the Rs 600 would take care of a five-member family’s food needs-when five times more is needed for survival.
To sweeten, promote and sell the controversial UID idea, the UPA is reportedly planning to gift Aadhaar-enabled smartphones worth Rs 7,000 crores to 400 million people, with 100 hours of free talk time and 500 free SMSs, besides free Internet access. This has nothing to do with providing basic necessities-which smartphones are not-but shows an obsession with promoting Aadhaar with pricey freebies.
The premise that AECT is a “game-changer” that will instantly raise the UPA’s popularity is fundamentally mistaken. Surveys show that more than 90 percent of the poor prefer PDS food to cash transfers, which are abuse-prone.
The UID project is fraught with grave technological, administrative and logistical problems. It uses unreliable markers such as fingerprints (which fail to identify people in 15 percent-plus of cases) and iris scans (which become dodgy with cataracts and other eye problems), and poses serious issues of data security and potential abuse of personal information by state agencies.
UID’s costs are exorbitant-probably Rs 100,000 crores-plus. Even the United Kingdom abandoned the idea. It’s as prone to errors like exclusion (of genuinely deserving beneficiaries) and wrongful inclusion (of undeserving ones) as below-poverty-line (BPL) lists, which notoriously leave out up to 40 percent of the poor. The same officials who compile BPL lists under the influence of the powerful will generate UIDs. Each excluded family means at least two lost votes.
UID has no statutory or legal basis. While considering the National Identification Authority of India Bill 2010 (to give legal backing to the scheme), Parliament’s Standing Committee on Finance termed the project “directionless” and lacking “clarity of purpose”. It also called the UID technology “untested, unproven, unreliable and unsafe”.
Coupling UID with bank accounts or hand-held devices like micro-ATMs through which banking correspondents (BCs) dispense cash to people will enlarge its inherent uncertainties and risks. These devices are dependent on centralised databases, Internet connectivity and reliable electricity supply. But rural areas often have no power for days and supply is erratic at the best of times. The scheme also assumes high integrity among BCs, who may be hostile or prejudiced towards the poor.
These problems were highlighted in two districts where AECT pilot projects were launched a year ago. In Ramgarh district of Jharkhand, payment of wages under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was made AECT-dependent.
The result has been appalling. The district administration simply couldn’t cope with the workload. The proportion of the population whose UID numbers are matched with their welfare details is less than two percent. Rural development minister Jairam Ramesh says coverage should be at least 80 percent for the scheme to become viable.
To receive cash in place of services, people must open bank accounts. But there aren’t enough bank branches. India’s 6 lakh-plus villages have only 32,000 branches. Ramgarh’s lead bank has expediently outsourced Aadhaar-related work to an Information Technology company, which has hired BCs. But the BCs are de-motivated because they aren’t paid on time. So Ramgarh has fulfilled only three percent of the target for MGNREGA wage payment.
In one block in Ramgarh, only 162 of 8,231 “active” job-card holders got paid through AECT. In another block, when fingerprint verification was recently attempted to pay pensions to 45 beneficiaries, it only worked in nine cases. Yet, even they haven’t been paid through AECT.
According to the area’s BC, half the MGNREGA workers’ fingerprints don’t match. In one case, reported by The Hindu, a poor worker tried fingerprint verification 13 times on the micro-ATM and failed. The BC told the despondent man to rub Vaseline or Boroplus cream onto his fingers for three to four days, and then come back!
Lest it be thought that the Jharkhand pilot’s poor performance is primarily attributable to the state’s backwardness and inefficient bureaucracy, another pilot at Kotkasim, a relatively prosperous village in Alwar district in Rajasthan-a relatively well-administered state which records India’s best MGNREGA performance-is an even more dismal failure.
The linking of any cash transfers to Aadhaar is basically misconceived because it will cause enormous disruptions and dysfunctions. A statement issued by a number of thoughtful social scientists urges us to “think of an old man who is currently getting his pension from the local post office, but will now have to run around getting his UID-enabled bank account activated and then may find his pension held up by fingerprints problems, connectivity issues, power failures, truant ‘business correspondents'”, and so on. It makes no sense to make his pension payment Aadhaar-dependent.
It would be even more wrong to substitute cash transfers for food and other commodities supplied through the PDS. PDS-subsidised food is a source of nutritional and economic security for millions of poor families, and has significantly reduced absolute deprivation. Recent experience points to an improvement in the PDS in many states. It’s possible to further revamp and reform the PDS. We urgently need a National Food Security Act, with a universal, as opposed to a targeted, PDS.
India’s rural markets are often poorly developed. It’s illogical to assume that cash can get you healthcare or food when it’s physically unavailable locally. Dismantling the PDS would disrupt the flow of food and put many people at the mercy of predatory traders and middlemen. Particularly hit will be vulnerable groups such as single women, the disabled and the elderly who lack the mobility necessary to withdraw cash and buy food from distant markets. Cash transfers will put huge amounts of money into circulation, causing inflation and eroding people’s purchasing power.
There’s certainly a case for cash transfer of old-age and widow pensions, maternity support and scholarships, but none at all as a substitute for food, fuel and other necessities. Cash transfers can best supplement public service provision, not supplant it. The UPA will invite disaster by supplanting it while reneging on its responsibility to the poor. (IPA)
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