The Government has decided to use the Aadhar regime to distribute subsidies. But the voter’s ID card scheme has a better penetration, writes Shruti Gupta
Price subsidies are ingrained in the economic fibre of India. It has acted as an effective mechanism to protect the poor and vulnerable sections of our society against inflation and volatile market scenarios. However, six decades post gaining independence, India cannot stand claim to have substantially reduced poverty. With nearly 22 per cent of the population living below the national poverty line, the Government has begun to question the gaps percolating it social welfare schemes and their effectiveness.
The PDS leakages for goods in India are startling. As per the Economic Survey of 2014-15, as much as 54 per cent of PDS wheat does not reach targeted households. And only half of the remaining subsidised wheat is consumed by the bottom three deciles. The fiscal costs to the Government is to the tune of Rs12,600 crore. This is just one example from the array of leakages that are prevalent across the country.
Termed as a game changing reform, the Finance Minister Arun Jaitley unveiled the JAM trinity of Jan Dhan Yojana, Aadhar and Mobile during the Budget speech of 2015-16 to the public. Mr Jaitley said, “The JAM trinity will allow us to transfer benefits in a leakage-proof, well-targeted and cashless manner”. Thus, the step in the direction of plugging leakages (without eliminating subsidies) through the JAM trinity is a welcomed effort.
The Pradhan Mantri Jan-Dhan Yojana is the cornerstone of the JAM Trinity. With over 1,254 lakh bank accounts opened under the scheme, it envisions to bring the unbanked into the purview of the Indian banking system. These Jan Dhan accounts will be utilised for direct benefit transfer to the end consumer, helping to eliminate leakages.
The thread which will weave the JAM scheme is the Aadhar card which ensures that two individuals with the same name and identical biometrics do not reside at the same address. Thus, by eliminating intermediaries in the transfer of benefits and by minimising duplication in identity, the Government aims to reduce monetary and managerial leakages. However, the card does not provide a mechanism to identify the economic status of the holder. Also, while the universal enrolment of the Aadhar is underway, it will only be completed in the next few years.
The third pillar of the JAM trinity is mobile money. As a financial delivery mechanism, mobile money is still in its nascent stages in India, a predominately a cash-based economy. Aadhar cards already contain the mobile number of the holder, therefore easing the process of bringing mobile money into JAM. To expand its horizons, it should be extended to transfer benefits through Post Offices and not just banks. With 600 million unique mobile users, growing at the rate of 2.82 million every month, mobile money if implemented properly can be the pivotal force of the JAM Trinity.
However, in March, the Supreme Court sought to demolish the foundation of the JAM after several petitions claimed the insistence by authorities for an Aadhar card to avail Government services. The card has no legal backing and cannot be made mandatory for all citizens. The Supreme Court issued a stern ruling that “no person shall be deprived of any service for want of Aadhar number in case he/she is otherwise eligible/entitled”. With the Supreme Court showing obvious discomfort with the Aadhar Card, where does the JAM trinity standIJ
The Government has implemented an alternative mechanism for direct benefit transfer schemes. The ceding of the Aadhar to bank accounts has been phased out for individuals who do not hold the card. For example, in the case of one lPG scheme, individuals without an Aadhar card can simply link their lPG customer number to their bank accounts to directly receive the subsidy. Therefore, is Aadhar a necessity for direct benefit transfer schemesIJ
The Government has also avoided confronting the issue of the inadequacy of the Aadhar to determine the economic status of the holder. While the Aadhar card is demanded for the issue and verification of blue cards, they are currently not being linked together. Therefore, the economically well-off continue to enjoy subsidies at the expense of the most fragile sections of our society.
Further, over the past few years, thousands of crores of rupees have been spent to ensure universal enrolment of the Aadhar. But the persistent question is: Was Aadhar the only solution to the leakages in our benefit schemesIJ The voter’s ID card has an enrolment of 80 per cent. The cost of bringing the remaining citizens into its purview would be cheaper and more effective.