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The UPA's cash transfer scheme — delivering over Rs.3.2 lakh crore in subsidies and welfare programmes to the poor, directly to their bank accounts — has raised fears in many quarters about the capacity of a rickety state apparatus to cope with messy implementation issues. Our collective self-confidence about being able to implement any new policy is so low today, we seem to be paralysed by the mere suggestion of a new way of doing things. To recover confidence about policy implementation, a serious attempt must be made to radically transform the manner of delivering social welfare programmes.
Of course, there will be resistance from the existing vested interests that have built a business model around some of our substantially funded welfare schemes. In fact, businesses have built monopoly supply arrangements at the state, district and panchayat levels, based purely on well-funded, Centrally-sponsored schemes for midday meals, health and low-cost housing. The late Ponty Chadha's food processing company alone supplied over Rs 9,000 crore worth of midday meals to schools, entirely funded by the Uttar Pradesh government. It was a near monopoly, so there was no way of ascertaining the real cost of supplies. This unique monopoly business arrangement, based on Centrally-aided programmes, is rampant in other states too. In UP, the scam around the misappropriation of Central health funds led to the murder of senior officials, while massive supplies of fertilisers disappear across the Nepal border — both symptoms of the new business model built around Central funding of welfare schemes.
The total funding through Centrally-sponsored schemes supporting health, education, employment as well as other social and physical infrastructure has increased from less than Rs 9,000 crore in the early 1990s,when reforms began, to Rs 2,37,000 crore in 2011. That means a 25-fold increase in Central funding. During this period, India's GDP grew from $350 billion to $1,800 billion. So it is clear that rapid growth in the post reforms period has helped generate funds for social welfare. What is not clear so far — and is a matter for perennial debate — is how efficiently such funds are being delivered to the real beneficiaries.