Direct Cash Transfer to the Public – Architecture

PM D.Manmohan Singh has set up the Architecture for Cash Transfers – a move to improve targeting, reduce wastage and leakages and increase transparency.

In a move to cut down wastage, duplication and leakages and enhance efficiency, the Prime Minister has given a major push to transfer individual benefits from the Government directly into the bank accounts of beneficiaries. This is to be done in a fast-track, accelerated mode to be achieved in a time bound manner. The idea is to move to a completely electronic Cash Transfer System for the entire population.

In order to accelerate the process, which currently is being tried in pilots on a small scale and whose results are very encouraging, the Prime Minister has set up the architecture for moving to electronic Cash Transfers leveraging Aadhaar.

The architecture of direct cash transfer to public will consist of:

(i). 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.

(ii). 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.

(iii). 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:

(a). Cash Transfer Mission – Technology Committee -to focus on the technology, architecture and IT issues.

(b). Cash Transfer Mission – Financial Inclusion Committee – to focus on ensuring Universal Access to Banking and achieving complete Financial Inclusion.

(c). 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.

Background to Aadhaar:

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.

Pilots

The results of pilots are encouraging. Electronic Benefit Transfer (EBT) has already begun in many cases. The Government and RBI have issued Guidelines to Banks for implementation of EBT. Pilots are under implementation, including in AP, Chhattisgarh, Punjab, Rajasthan, TN, WB, Karnataka, Puducherry and Sikkim.