PM push for electronic cash transfer of welfare benefits

In a major reform push to make government welfare measures effective and check corruption, Prime Minister Manmohan Singh on Friday set up a national architecture to 'rapidly' roll out electronic cash transfer system for entire population. HT reports. Economic challenges ahead

In a major reform push to make government welfare measures effective and check corruption, Prime Minister Manmohan Singh on Friday set up a national architecture to 'rapidly' roll out electronic cash transfer system for entire population.

The system, Prime Minister’s office said in a statement, will cut down "wastage, duplication and leakages and enhance efficiency" in transfer of individual benefits from the government into the bank account of beneficiaries. In addition, it will also reduce corruption, control expenditure and facilitate reforms.

HT on September 24 had reported that by 2017 the government will embarked upon a major plan to roll-out a cash transfer scheme for its welfare measures in form of subsidies, pensions and scholarships worth Rs. 3,50,000 crore in 2012-13. The cash transfer government believes is necessary, as its schemes are not effective because of poor delivery mechanism and corruption.

PM Singh set the ball rolling to leverage Unique Identification (UID) or Aadhaar platform for cash transfer by setting up a three-tier mechanism with national ministerial committee headed by him and with representatives from concerned ministries as an overarching body.

There will also be national executive committee of secretaries to ensure adherence to time-lines set by the top body. To make implementation fast and smooth, the PM has also set a cash transfer missions each on issues of technology, financial inclusion and electronic transfer.

The PMO statement said the cash transfer scheme will have a momentous impact on the government's various social programmes and help million of beneficiaries. “A Cash Transfer System can be used for transferring cash benefits such as NREGA Wages, Scholarships, Pensions, Income support of other types and Health Benefits,” the statement said.

Electronic Transfer of Benefits (ETB) is a simple change as the transfers are already taking place and the only modification that would be involved is a movement from a paper based, cash driven system to an electronic direct transfer system.

The decision aimed at checking growing subsidy burden comes on the day a government panel recommended sharp reduction in subsidies on petroleum, food and fertilizer. The government’s subsidy bill in financial year 2011-12 was Rs 2,33,000 crore and projected to cross Rs 2,50,000 crore in this fiscal.