The government’s ambitious cash transfer plan is being rolled out in 20 districts tomorrow. Its supporters call it a game-changer for governance, accounting and benefit delivery for the masses.
Out of India's 629 districts, 20 would switch to the new system with 23 more to follow in February and March. In all, money for 23 separate welfare schemes - previously disbursed to third parties by the central government -- will now be paid into the bank accounts of an estimated 200,000 beneficiaries.
For example, scholarships for higher education of low-caste students, previously paid to a university, would now be transferred directly to the individual who would then pay for his or her studies. The advantage is that the government can be sure about the money reaching the intended claimant, without their paying bribes to get their due or officials diverting the funds for other purposes. However, critics counter that the government has been too quick in rushing a pet project and is bound to face huge practical problems due to the complex technology and public administration required.
As of now, there is no intention to start cash transfers for subsidised food, fuel and fertiliser -- three key benefits for the poor in India's $61-billion annual welfare budget.
Mexico and Brazil are global leaders in cash welfare schemes, using their Progresa/Oportunidades and Bolsa Familia programmes respectively to target the poor.