HOW SUBSIDIES REACHED PEOPLE

DIRECT CASH TRANSFER:INTRODUCTION

DIRECT CASH TRANSFERS: HOW DOES IT WORK?

India – DCT WorkingINDIA: DCT WORKING

The scheme is supposed to benefit roughly 200 million

poor,considering every family on an average has 2

adult members.

The government plans to cover the target BPL families and deposit Rs.3.2 lakh crore per

year in the bank accounts of 100 million poor families by 2014

Structure set up by

Prime Minister to monitor scheme

1. National ministerial committee

2. National executive committee

3. Implementation committees

Steps taken by

government

Weeding fakes and ghosts

through AadharPayment

Bridge(APB)

Formation of Central Plan

Scheme Monitoring

System

Role of Banking Correspondents

Compatibility of benefit transfer

system with banking system

Mapping list of beneficiaries under every scheme with

their bank account details

Ad

van

tage

s Identification through Aadhar number

Elimination of middlemen

Reduction in duplicate and ghost beneficiaries

Enhances efficiency of welfare scheme

Challenges and Constraints

Challenges and

Constraints

Over-reliance on Aadhar

number and bank account

Safeguard for maintaining

privacy

No clarity regarding banking

operations Role of multiple agencies

Last mile, logistics and

structural scaffolding

What are the Critical Success Factors?

•Government’s efficiency in dealing with the fundamental issues like the basis of targeting, definition of poverty line & identification of intended beneficiaries•Effectively subsidizing the poor for fertilizer or kerosene once the prices are market determined and are liable to fluctuate•Devising a methodology to transfer the cash subsidy to the poor•State government’s endeavor in taking up fundamental reforms required in Public Distribution System (PDS)

What are the critical success factors?

Is DBT scheme a poll plank?

•Congress wants to cash in on cash transfers.•Though the announcement date of DCTS was in September, UPA waited for two months to unveil details of the scheme for the poll season to arrive.•BJP had written to the Election Commission saying the government should withdraw the announcement of the plan until the polls were over in Gujarat and Himachal Pradesh in response to which the government said that the Finance Minister in his budget speech made the first announcement about the scheme on March 16, 2012. •DCTS widely criticised by Mayawati, CPI(M) and Arvind Kejriwal.

IS DCTS A POLL PLANK?

WORLD BANK REPORT: DOES THE IMPLEMENTATION OF DIRECT CASH TRANSFER SCHEMES HAVE AN EFFECT ON THE VOTING PATTERN OF THE CONCERNED

CONSTITUENCIES?

Beneficiaries vote for the party which

implemented the plan

Non –Beneficiaries

in poorer places vote for party, in hope that it would implement

plan there too

Every plan of the

government has a domino and a ripple

effect. A good policy is a

good gesture. And a good gesture gets

you the votes.

COGNITION

The Opposing Party did

decently in poor places.

Failed with the poor people and

definitely not with the poor people in the

richer area

Positive Correlation

between voting patterns in favor

of the party implementing Cash Transfers

Inferences from the world bank report in the Indian Scenario.

•The political parties which oppose the Congress on bringing

the programme at a time so close to the Indian Annual

elections is technically correct. The favorable voting effect is

affected by the direct cash transfer scheme.

•Conjectures on possible political rewards linked to

participation in CCTs have been reported following

presidential elections in Ecuador, Peru, Mexico and Brazil

•The World Bank study concludes that voters respond to

targeted cash transfers and that these transfers can foster

support for incumbents.

Inferences from World Bank Report in Indian scenario

OUR TAKE ON DCTS

Ou

r ta

ke o

n D

CTS

DCTS can reduce leakages

Cash transfer is a step forward but have slow

pace

DCTS can help control inflation and fiscal deficit

DCTS may hurt girls and children

Cash transfer is more efficient than PDS

SuggestionsSUGGESTIONS

Transfer of cash subsidy

BOLSA FAMILIA PROGRAMME, BRAZIL: A SUCCESS STORY EVOLUTION

In January 2003 President Lula promised to eradicate hunger and fight poverty in his inaugural speech and in fact, conferred high priority to the Zero Hunger strategy. This strategy included several interventions / programs, including the Bolsa Familia Program.

Widespread belief that the people are poor due to the fault of the unjust

society

The 1988 constitution established a legal

foundation on social assistance as guaranteed rights for the needy- and also an obligation of the state to provide health and education services,

among others, the access to which is established as a basic right of all citizens

BFP

CREATED

2003

Motivate families to ensure their children complete a

secondary education

Keep families from entering children under 14 years old in

the labor market

Motivate these families to use health services, especially the pregnant women and children

under 7 years of age

In the long run, the aim is to break the intergenerational

poverty cycle

AIMS

IMPACT

Conclusion

“To empower people, you have to supplement money with

information and community building. Information or direction,

on how to utilize money and a community, to give them a

sense of collective unit, essentially meeting the goal of

economical distribution of subsidy”

Direct Cash Transfer Scheme is, in P. Chidambaram’s words, a

game changer. Although not entirely true in the present, it

could be for the benefit of the country, as long as we

efficiently ensure the “AAPKA PAISE AAPKE HAATH” motto is

achieved.

Conclusion

References

• 1. Dutta, Puja, Howes, Stephen and Murgai, Rinku, 2010. “Small but Effective: India’s Targeted Unconditional cash transfers,” ASARC Working Paper18

• 2. Gangopadhyay, Shubhashis, Lensink, Robert and Yadav, Bhupesh, “Cash or Food Security through the Public Distribution System? Evidence from a Randomized Controlled Trial in Delhi, India”

• WORLD BANK REPORTS

Arnold with Conway and Matthew Greenslade,Department for International Development, Policy Division 2011, Cash transfers.

United Nations Development programme, India : Cash transfer for alleviating human poverty: Relevance in India