The key identification enabler, Aadhaar, was developed by the previous government but became mired in controversy, some of it created by the Bharatiya Janata Party itself, then in opposition. The DBT for LPG was also introduced by the previous United Progressive Alliance government, but was held back when initial glitches surfaced. Right now, Aadhaar registration is not compulsory and a sixth of those who have registered for LPG have not furnished Aadhaar details. They have three months to do so. Even if a consumer fails to do that, she will not lose her subsidy for good as it will rest in an escrow account until the paperwork is complete. These important fallbacks have been introduced so that consumers can take their time to understand what they have to do and do it with confidence.
It is to the credit of Prime Minister Narendra Modi that he saw the potential of Aadhaar as a key enabler for the DBT scheme and stretched out across bipartisan skirmish lines to revive and adopt it. Once the DBT scheme gets fully going, leakages resulting from the existence of fictitious consumers and impersonation will be virtually abolished. But more will need to be done to meaningfully target subsidies. The important task of identifying the deserving in order to make targeting work has to be a separate exercise and that is likely to prove challenging. Right now an absurdly huge proportion of households in several states has been designated as falling below the poverty line and, hence, entitled to many subsidies. This is a failure of targeting. As only three per cent of Indians pay income tax, determining incomes for the rest to enable effective targeting will be both difficult and controversial.