Architecture for Cash Transfers

With an aim to check corruption and pilferage of subsidised items, Prime Minister Manmohan Singh has decided on an ambitious scheme of direct transfer of cash to intended beneficiaries that is expected to cover one quarter of households. To give final shape to this programme, Singh has set up a architecture comprising a committee under him besides a few other panels which would ensure time-bound implementation of the project leveraging the Aadhar scheme. Here are some notable points about the Architecture for Cash Transfers:

Introduction

A huge amount of Rs 3,25,000 crore annually is spent on subsidies. There is a need to check corruption and pilferage of subsidised items like diesel, LPG and other benefits like pension and scholarships. To cut down wastage, duplication and leakages and enhance efficiency, the government is giving major push to transfer individual benefits from the government directly into the bank accounts of beneficiaries. This is to be done in fast-track, accelerated mode to be achieved in a time-bound manner. The scheme which is being implemented on a pilot basis in states like Chhattisgarh, Andhra Pradesh, Karnataka, West Bengal, Punjab, Tamil Nadu, Rajasthan and Sikkim.

Structure

Architecture for Cash Transfers is a coordination mechanism which is consists of__

• National Ministerial Committee – under the Prime Minister with membership of all concerned ministers (Finance, IT, Social Justice, HRD, Minorities, Labour, Health, Food, P&NG, Fertilizers, Planning Commission, UIDAI,). This committee at the highest level would ensure coordination and decision-making at the highest level and impart the necessary urgency to the program.
  
• National Executive Committee – with the Secretaries of all concerned Ministries as members. This committee would meet frequently to coordinate action, ensure adherence to time lines and sort out hitches in the program as it is rolled out.
  
• Implementation Mission and Committees – to work on and finalise all operational and implementation details relating to the design and operation of the transfer system. There is a lot work needed to have a smooth roll-out and has to be done in a Mission mode with multiple agencies acting in a coordinated manner. The Mission will have the following sub-committees:
  
  • Cash Transfer Mission – Technology Committee -to focus on the technology, architecture and IT issues.
    
  • Cash Transfer Mission – Financial Inclusion Committee – to focus on ensuring Universal Access to Banking and achieving complete Financial Inclusion.
    
  • Cash Transfer Mission – Electronic Benefit Transfer (EBT) Committees – to work out the details relating to EBT such as data bases, transfer rules, controls, audits, etc. There would be one for each Ministry which is engaging in benefit transfers.
    
• The milestones and timeliness for each of these Committees will be clearly laid down. The National Executive Committee will monitor progress and ensure timely roll-out. This scheme will have a momentous impact on the government’s various social programmes and help million of beneficiaries.
  

Role of Aadhaar & NPR

With the rapid rollout of Aadhaar, now covering 20 crore people and rapidly growing to 60 crores, and with the National Population Register covering the other half, it is possible to move to a system of transferring cash benefits directly to the poor. 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. 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. Cash Transfer System would improve targeting, reduce corruption, eliminate waste, control expenditure and facilitate reforms.