NEW DELHI -- India
will pay billions of dollars in social welfare money directly to its
poor under a new program that aims to cut out the middlemen blamed for
the massive fraud that plagues the system.
Previously officials only handed
out cash to the poor after taking a cut — if they didn't keep all of it
for themselves — and were known to enroll fake recipients or register
unqualified people. The program inaugurated Tuesday would see welfare
money directly deposited into recipients' bank accounts and require them to prove their identity with biometric data, such as fingerprints or retina scans.
Finance Minister P. Chidambaram has described the venture as "nothing less than magical," but critics accuse the government
of hastily pushing through a complex program in a country where
millions don't have access to electricity or paved roads, let alone
neighborhood banks.
The program is loosely based on
Brazil's widely praised Bolsa Familia program, which has helped lift
more than 19 million people out of poverty since 2003. It will begin in
20 of the country's 640 districts Tuesday, affecting more than 200,000
recipients, and will be progressively rolled out in other areas in the
coming months, Chidambaram said Monday. The country has 440 million people living below the poverty line.
"In a huge new experiment like this you should expect some glitches.
There may be a problem here and there, but these will be overcome by our
people," Chidambaram said.
He appealed for patience with the program, which he called "a game changer for governance."
The opposition Bharatiya Janata
Party has accused the ruling Congress party of using the program to gain
political mileage ahead of elections expected in 2014.
As a first step, the government has said it plans to begin directly
transferring money it would spend on programs such as scholarships and
pensions.
Eventually the transfers are
expected to help fix much of the rest of India's welfare spending,
though Chidambaram said the government's massive food, kerosene and
fertilizer distribution networks — which are blamed for much of the
corruption and lost money — would be exempt.
The program will eliminate
middlemen and transfer cash directly into bank accounts using data from
Aadhar, a government project working to give every Indian identification
numbers linked to fingerprints and retina scans. Currently hundreds of
millions of Indians have no identity documents.
On Monday, 208 activists and scholars published an open letter
expressing concern that the government was forcing the poor to enroll in
Aadhar to get welfare benefits without putting safeguards in place to
protect their privacy. They also expressed fears the government planned
to eventually replace the food distribution system for the poor, the
largest program of its kind in the world.
"Essential services are not a suitable field of experimentation for a highly centralized and uncertain technology," they wrote.
Others said the government was trying to do too much too soon.
"A very important concern is are
we ready for this sort of thing? The banking infrastructure is very
poor, people are far from these banks, when they exist they are
overcrowded. Sometimes people have to walk for a day to get to the
bank," says Reetika Khera, a development economist with the New
Delhi-based Institute for Economic Growth.
Mihir Shah, a member of India's
Planning Commission accepts that the government's timeline is
"unrealistic," but said many critics had confused the lack of readiness
with flaws in the plan itself.
"My question to them is is it
better than what is there today? That is the only way we can judge
policy. I don't think there's a perfect solution to any of mankind's
problems," he said.
Shah said a lot more work needed
to be done before cash transfers could become a reality across the
country. The identification drive needed to reach the vast majority of
India's poor, and villages needed banking infrastructure and Internet
connectivity.
"It is going to take time and it
will happen only when it happens whatever the deadline. It will be
rolled out only when these conditions are in place," he said. But if the
deadline "pushes us to fix the lacunae that currently hamper the roll
out of cash transfer, then we're in the right direction."
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