PM asks ministries to implement cash transfer scheme urgently: 10 latest developments

The Prime Minister's Office today directed various ministries and departments to immediately get down to the task of operationalising the ambitious programme to be rolled out from January 1, next year. It will be implemented in 51 districts across the country from that date.

The BJP though wants the roll-out to be deferred, saying that the announcement was made keeping in mind the Gujarat elections. It told the Election Commission that such announcements violate the model code of conduct in place for elections, since some of the districts included in the first phase of the scheme are in poll-bound Gujarat. Some states, like Chhattisgarh, have objected to the scheme. Chhattisgarh has said there are technological limitations to its success in the state.

The scheme, the government says, will put money directly in the hands of the beneficiary, cutting out middlemen, leakages, wastage and corruption. But it is not yet going to replace food and fertilisers subsidies for below-poverty line (BPL) families and farmers, since these will require more time and logistical support. The government has left these to a later phase.

The scheme will ride on the Aadhaar Unique Identification (UID) for opening bank accounts where the money for beneficiaries will be directly transferred. The PM and his office have laid special emphasis on the completion of the UID activity, since the success of the cash transfer depends on that. For areas that don't have easy access banks, the government has proposed mobile ATMs.

Some activists and opposition parties are unhappy with the scheme. The CPI(M) in particular says that the state is abdicating its responsibilities to provide subsidies to the needy by giving them cash and will shut down the the public distribution (ration shop) system. It also says that the scheme doesn't take into inflation, where the value of the cash will diminish as prices rise.

Other opposition parties, including the newly-named Aam Aadmi Party, have accused the government of trying to "bribe" the voter by giving cash.

The government though has refuted these allegations, saying that PDS shops will remain, from where beneficiaries can buy food. It also says that with cash, the option of buying non-PDS foodstuff also opens up.

Direct cash transfer is for now aimed at 42 government schemes, including pensions and scholarships. In some cases, cash is already being given, but with the new scheme it will reach directly from the government to the beneficiaries, cutting out any other institutional or government intermediary. To get the cash, beneficiaries need to get their Aadhaar UID card by March 2013.

The first phase will also include cash transfers for cooking gas cylinder subsidy. The government has cut down subsidised gas cylinders to six a year, but BPL families in Congress-ruled states will get three extra ones.

Under the scheme, the government will disburse Rs. 3 lakh crore every year, with each BPL family getting between Rs. 3,000 and Rs. 4,000 a month in a designated bank account.