Cash course

Last Updated: Fri, Dec 07, 2012 21:01 hrs

pAs the government gets ready to roll out its ambitious cash transfer of subsidies scheme on January 1 emVeenu Sandhu Santosh Tiwariem & emIndulekha Aravindem get on the ground to investigate how the experiments are working outppM B Chinnappa chief manager of State Bank of Mysore has been rushing from one meeting to another It&rsquos his job to ensure that by December 15 at least one member of each of the 535000 households in Mysore district has a bank account The account will be linked to his unique identity number Aadhaar and subsidies for different welfare schemes will be transferred directly to the account from January 1 For Chinnappa the challenge is to make sure that over 200000 accounts are opened in a little over a week in the 360 bank branches in the district &ldquoEfforts have been launched on a war footing and I&rsquom sure we will meet the target&rdquo says Chinnappa before rushing off to his next appointment at the Akashvani station where he is scheduled to give an interview on the subject which will be broadcast all over KarnatakappMen like Chinnappa have been galvanised into action for what is being seen as the biggest governance reform of recent times transfer of subsidies directly to the poor and needy The spin doctors of the United Progressive Alliance or UPA have begun to call it a game changer &mdash something that will help it overcome the negativity generated by recent scams before the 2014 general elections The political overtures of the tagline leave nothing to the imagination emAapka paisa aapke haathem Your money in your hand the Congress&rsquos election symbol is the handppEver since Prime Minister Manmohan Singh announced at Dudu in Rajasthan on October 20 in the presence of UPA Chairperson Sonia Gandhi that the scheme would soon be unveiled his office has worked overtime to ensure that it is launched in 51 districts on January 1 2013 and the entire country by April 1 2014 The real force behind the initiative is none other than Rahul GandhippThe starting point was the observation made by his father the late Rajiv Gandhi that only 15 paisa out of every rupee given in subsidy reaches the poor From the government it is being piloted by Rural Development Minister Jairam Ramesh He is supported by Finance Minister P Chidambaram who had when he was home minister raised serious doubts about the Aadhaar drive Singh&rsquos principal secretary Pulok Chaterji a bureaucrat known to be close to the Gandhis is coordinating between the various agenciesppNandan Nilekani the Infosys promoter and honcho who left the corporate world to head the Unique Identification Authority of India or UIDAI is overseeing the Aadhaar rollout That&rsquos actually the real challenge The Aadhaar numbers currently stand at 220 million about 18 per cent of the country&rsquos population And about 40 per cent of these enrollments have come from just two states Andhra Pradesh and Maharashtra Nilekani&rsquos job is to enroll another 400 million by April 2014 in 16 states the rest of the country will be covered by the home ministry in its National Population Register or about 25 million a monthppRecent numbers aren&rsquot encouraging At the most UIDAI has done 247 million enrollments in a month January this year In the last four months enrollments have ranged from 531 million to 116 million a month In at least half of the 51 districts that will go live with cash transfers from January 1 the target of 80 per cent Aadhaar penetration is yet to be achievedppTo begin with the government plans to put 29 social schemes on cash transfer mode These include payments of wages and pensions The first pilot was run in four districts of Jharkhand a year ago wages under Mahatma Gandhi National Rural Employment Guarantee Scheme were put into the bank accounts of more than 3500 beneficiaries using their Aadhaar numbers In Aurangabad Maharashtra pensions under five social-security schemes are now paid on the basis of Aadhaar Another pilot for pensions is running in Tripura That&rsquos the easy bit The tough part will be fuel food and fertiliser subsidies The first of these will be fuel subsidy kerosene and liquefied petroleum gas or LPGpp aligncenter ppKotkasim a block of 24 villages in Alwar district of Rajasthan some 180 km south of Delhi is where the pilot on kerosene is being carried out Since last December ration shops here no longer sell kerosene at the subsidised price of Rs 15 a litre it&rsquos sold at Rs 50 a litre the price was recently raised from Rs 45 a litre The difference is put into the bank accounts of the people by the government There are 25000 ration-cards in Kotkasim Those with two LPG cylinders were told that they are not entitled to subsidised kerosene Finally 20000 eligible beneficiaries were identified Those with a gas connection could buy two litres of kerosene and those without could buy three litres As many as 14000 new bank accounts were opened The subsidy for the next three months which ranged from Rs 175 to Rs 263 was deposited in each account Subsequent subsidy would be deposited into the accounts of only those ration-card holders who buy the kerosene from the ration shopsppKerosene admit both the shopkeepers and ration-card holders was being sold in bulk to anybody who came armed with ration cards At Rs 15 a litre it was much cheaper than diesel around Rs 42 a litre and was used to run generators water pumps and as one dealer claims even tractors after mixing it with diesel Not every family in this rather well-to-do area needed three litres of kerosene a month and would willingly lend their ration cards to proxy buyers for a cut of course The difference between the market price and the subsidised one was a huge incentive for shopkeepers to divert supplies Most succumbed to the temptationppThe year-old pilot project has however put an end to this &ldquoKerosene sale in the area which was about 84000 litres a month a year ago has plunged by nearly 70 per cent&rdquo says Alwar District Collector Ashutosh A T Pednekar with evident satisfaction This he claims has happened because leakages have stopped and the black market has disappeared Shopkeepers and buyers on their part say many poor people can&rsquot afford to buy kerosene any longer Maybe they&rsquove found some other use for the money though liquor shops and sweetmeat sellers haven&rsquot seen any noteworthy rise in demand People also blame the administration saying it doesn&rsquot deposit the money on time in their accountsppThere are other problems too Dharamvir Singh Chaudhary has been running a ration shop in Kotkasim for 13 years Till last year he would get 1800 litre of kerosene a month and every drop of it would get sold His commission was 90 paisa a litre Now he has to buy kerosene at Rs 50 but the commission remains the same 90 paisa This has seriously cut his return on investment &ldquoInitially the district supply officer gave each dealer a cheque of Rs 3000 to compensate for this sudden burden but we&rsquove got nothing since then On top of that I&rsquom straddled with this&rdquo he says pointing to the 220-litre drum of kerosene lying in the courtyard in front of his shop &ldquoThe government is forcing us to buy it and stock it&rdquoppLast month after much resistance Chaudhary bought two drums 440 litre for Rs 22000 from the supply van &ldquoThe inspector said if I don&rsquot stock it my licence as dealer would be cancelled&rdquo he says calling it blackmail He then decided to pass on this &ldquoburden&rdquo to the people who came to buy ration from his shop &ldquoWe the shopkeepers told them that if they wanted to buy wheat from our shops they would have to first buy kerosene&rdquo he admits adding that he managed to &ldquoget rid of&rdquo one drum between 90 ration-card holders Nirmala Devi another shopkeeper wants her commission to be raised from 90 paisa a litre to Rs 5-6ppBeneficiaries make numerous visits to the designated banks State Bank of India Punjab National Bank and Rajasthan Gramin Bank to find out if the subsidy has come into their accounts But there are others daily-wage earners who cannot afford to make even one trip The villages in Kotkasim are spread out some are 17 km away from the bank One trip to the bank would mean a day&rsquos work gone a day&rsquos wages Rs 150-300 lostppSensing a business opportunity a team from Vodafone has been visiting Kotkasim to study the feasibility for mobile-banking solutions Teams from Kerala and Chhattisgarh too have descended on Kotkasim to study its cash transfer model The verdict the administration is satisfied shopkeepers are hassled and consumers confusedpp aligncenter ppSeveral hundred miles to the south in Mysore another pilot was launched in January this year for the targeted delivery of LPG cylinders using Aadhaar gas connections will be linked to the Aadhaar number In the next phase consumers will be given the subsidy directly in their banks The district was chosen for its high Aadhaar enrollment rate &mdash till last month 948 per cent of the total population of 299 million had enrolled Three gas agencies have been chosen for the experiment one each of state-owned IndianOil Bharat Petroleum and Hindustan PetroleumppAt his swank IndianOil agency in Vani Vilas Market Vinod Maroli says he has delivered close to 18000 cylinders so far in this manner The agency has over 25000 customers The new delivery mechanism has helped check diversion to the black market says Maroli Due to the streamlining of the process the number of days a customer has to wait for a new cylinder has gone down from seven to two Tellingly the number of cylinders the agency delivers has also reduced though Maroli cannot say by how much &ldquoBut the fact that there has been a 40 per cent dip in product movement across the country should give you an idea of the scale&rdquo he saysppAn IndianOil executive requesting anonymity says the results have been encouraging &ldquoWe have established that the first phase the delivery of cylinders via Aadhaar biometric identification works so now we have to test the next stage&rdquo he says All three agencies have delivered around 40000 cylinders that were Aadhaar-verified since the scheme was launched in January he says and subsidy transfers have already taken place in small groups At the moment all agencies in the district have been asked to focus on ensuring their customers have Aadhaar-linked bank accounts he adds From January the project will go live The first phase seems to have gone off without glitches The next phase is the acid testppHowever confident State Bank of Mysore&rsquos Chinnappa may be it will be no mean task to ensure that over 200000 people open bank accounts in the space of a week Many feel that the deadline could well be postponed At the food and civil supplies department the overseeing authority for LPG cylinders officials are unclear about the next phase of the Aadhaar pilot saying they are yet to receive any kind of official notification of the January 1 rollout &ldquoWhatever we know is from what we read in the newspapers&rdquo says one of themp

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