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Can direct cash transfer be a success?
Tue, 8 Jan Pre-Open

Rationalization of subsidy has always been a huge challenge for the government. Due to pilferages in system the existing delivery mechanism turned futile. That's because the intended beneficiaries were not getting the due benefits. In other words, due to corruption prevailing in the system money usually got siphoned off mid way rather than reaching the ultimate beneficiary. As a result, government decided to introduce the direct benefit transfer scheme (DBTS).

In this scheme, money will be directly credited to the Aadhar linked bank accounts of the intended beneficiaries. It was launched on 01 January, 2013 in six states and 3 union territories. By the end of the year DBTS aims to cover the entire country. With the benefits (cash) being directly credited to the bank accounts it is believed that it will do wonders to the existing broken down delivery mechanism.

However, Mr Jairam Ramesh, Union Minister for Rural Development has cautioned that DBTS is not a magic wand. True, that it is an administrative reform. But it has its own challenges. For one, absence of proper infrastructure can prove to be a hindrance. Operational problems may also arise with respect to banking and online connectivity. Further, to be eligible for the benefits one needs to have the Aadhar card. While many do have these cards as of now, it may take a while before the entire eligible population is brought under the Aadhar ambit. Also, it should be noted that the scheme has been launched mainly for the benefits of poor who reside in villages. Neither all of them have bank accounts nor are there enough banks in the rural areas.

Thus, financial inclusion (banking in rural areas) will be a key to the success of the scheme. Nonetheless, opening of up of ATMs in rural areas will also help. This would mean getting money would be easier as people don't have to go specifically to banks for cash withdrawals.

Overall, it seems there are many challenges for successful implementation of DBTS. But government is already aware about them and is also committed to solve these problems. However, if it really does than it would be the biggest administrative reform in India!

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