The government plans to shift to cash transfer of subsidies by 2017. This is too slow. India would be embarking on its 13th five-year plan by the time the project gets underway. Welfare delivery over the 12th plan will have to be based on systems that are demonstrably inefficient and prone to graft. In effect, the first fuel or food subsidy will be issued under the new system seven years after the country embarked on a unique project that intends to provide every Indian with an identification number.
This delay is surprising because, at Rs. 120 a pop for getting your iris and fingerprints lodged in a secure digital warehouse, Rs. 15,000 crore it will cost to roll out the unique identification number project could pay for itself, its proponents estimate, in a year by saving the government Rs. 20,000 crore in subsidy payouts that end up in the wrong hands because of duplication. For a big government like India’s, which spends every fourth rupee of the national income, biometric identification is the first step in plugging the holes in its notoriously leaky welfare delivery pipeline.
Inter-ministerial turf wars have held it up. The Planning Commission and home ministry have been at odds over how to go about the identification. But accusations that government agencies are out to scupper the initiative are outlandish. The reason to undermine a solution to India’s welfare delivery will emerge after the database is in place, not while it is being built.
The Unique Identification Authority of India has heeded the home ministry’s concerns over how it is setting up its registry. This is a tactical retreat for the authority because fierce opposition to the project could erupt once it is actually put to use.
The government, on its part, is justified in sanctioning multiple headcounts since it does not matter how many agencies are involved in collecting data as long as the end product is robust. But now that the differences among the arms of the government are reconciled, the identification project should be put on the fast track.
India is poised to spend much more money on welfare than it has in its entire independent history. The recurrent theme over the next decade will be on the accountability of government expenditure. Here, however, much work needs to be done to create a security net that renders discretion — political and bureaucratic — redundant.
Information technology offers an easy learning curve and the unique identification number a good starting point to get a fix of how big the issues of poverty and illiteracy actually are.
Critically though, India’s transition to a semblance of a welfare state requires the will of a political class that stands to lose its clout in a technology-driven regime. Yet, the next stage of reforms the country needs has more to do with the delivery of governance than any specific section of the economy.