The poor can hope to get subsidies directly through bank branches, automated teller machines, business correspondents, the internet or mobile banking if the recommendations of the Nandan Nilekani task force are implemented.
Pilot projects for such direct cash transfers will begin in seven places — Tamil Nadu, Assam, Maharashtra, Haryana, Delhi, Rajasthan and Orissa — from October, according to the schedule suggested by the Unique Identification Authority of India, which Nilekani heads.
Nilekani on Tuesday submitted a 70-page ‘Interim report of the task force on direct transfer of subsidies on kerosene, LPG and fertilizer’ to the government. The report suggested creation of a Core Subsidy Management System (CSMS) for maintaining information on entitlements and subsidies for all beneficiaries.
| PLAN OF ACTION |
| LPG |
| Phase I: Cap consumption of subsidised cylinders (Policy decision of the government and not a specific task force recommendation) |
| Phase II: Consumers buy LPG at market price, with direct transfer of subsidy to their bank accounts |
| Phase III: Identify and target segmented customers for subsidy |
| FERTILISER |
| Phase I: Information visibility up to the retailer level |
| Phase II: Direct transfer of subsidy to the retailer |
| Phase III: Farmers buy fertilisers at market price, with direct transfer of subsidy to their bank accounts |
| KEROSENE |
| Phase I: Cash transfer through state governments |
| Phase II: Cash transfer to accounts of beneficiaries |
| Source: The interim report of the task force on direct transfer of subsidies on kerosene, LPG and fertilizer |
“The CSMS will provide increased transparency in movement of goods, the level of stocks, prediction and aggregation of demand and identification of beneficiaries,” said the report. This could be integrated with a grievance redressal mechanism to enable the beneficiaries to report malpractices directly.
The report recommends creation of a centralised software for product and service transfer.
After this, integration into the CSMS could start, followed by authentication of the beneficiary through the ‘Aadhar’ (unique identification) numbers. The final integration could be of bank payment systems. The report said direct transfer of subsidy to wholesalers or retailers could also be considered in the interim period, before direct transfer to consumers. It advocated regional, phased rollout of direct transfers. Accepting the report, Finance Minister Pranab Mukherjee said, “The pilot project will take six months. Taking into account the experiences they will gather, they (the panel) will submit the final report by the end of this year.”
LPG
For direct transfer of cooking gas subsidy, the report suggests capping the consumption of subsidised cylinders for all customers, as the number of illegal cylinders is substantial. In the second phase, the subsidy is to be directly transferred to the customer’s bank account. In the final phase, more precise targeting and segmentation is proposed.
FERTILISER
On fertiliser, the report recommends creation of information visibility on movement along the entire supply chain. After this, the subsidy will be released to the retailer’s bank account on receipt of fertiliser from the wholesaler. In the long run, once Aadhaar covers the entire country and Aadhaar-enabled payments are operational, subsidy can be directly transferred to the bank account of the beneficiary, says the report.
KEROSENE
The report said this should be done through state governments as they were the one who operated the public distribution list and had records of all beneficiaries. The cash will be transferred to the account of the beneficiary.
