The government’s direct cash transfer scheme for subsidies might not lead to an increase in inflation, said D Subbarao, governor at the Reserve Bank of India (RBI).
“If cash is used for necessary consumption, (then) it will be productively spent. I don’t think there will necessarily be any implication of inflation on that,” he said to a media query after the central bank’s board meeting here on Thursday.
The scheme was initially announced by the former finance minister and current president, Pranab Mukherjee. Beneficiaries would get cash in their bank accounts instead of subsidies for food, gas, kerosene and other essential items. The beneficiaries are expected to buy food from public distribution shops using this cash.
The government recently asked ministries to fast-track the scheme. A deadline of December 15 has been given to state-run lenders to open bank accounts in 51 districts. Subbarao noted that West Bengal was lagging other states in implementation.
“The state government is very anxious to roll-out electronic benefit transfer to bank accounts. A lot of states are already ahead of West Bengal,” he said, noting that not a single district in the state figured in the 51 chosen for the roll-out.
From March, he said, the state government would begin implementing the direct cash transfer in six of its 18 districts.
