PM delivers a game changer

Manmohan Singh

Come January, the eligible population in 51 districts will receive cooking gas, kerosene and food subsidies in cash in their bank accounts, apart from pension and wages under the rural job guarantee scheme. The Aadhaar-enabled rollout will be expanded quickly to cover 18 states/Union territories effective next April and the entire country by the end of next year.

Though the salutary impact of the move on this year's Budget will be minimal, the direct cash transfer scheme would doubtless give a potent tool to the government in subsequent years in its fiscal consolidation efforts. The scheme could help curb the subsidy outgo and reduce leakage in social infrastructure funding.

Prime Minister Manmohan Singh-headed National Committee on Direct Cash Transfers on Monday decided to roll out the cash transfer programme across the country. Apart from disbursal of various subsidies, doles related to health, education and financial inclusion would also be distributed using this platform.

According to government sources, Monday's meeting of the committee saw discussions on how to move forward and operationalise direct cash transfers. Devising detailed rollout plans and ensuring rapid rollout for better coverage were also discussed and plans have been more or less finalised.

As per the programme, all departments engaged in transferring benefits to individual beneficiaries will quickly move to an electronic direct cash transfer system, based on an Aadhaar Payment Bridge or APB and identify the schemes to move to this system. They will also prepare a roadmap for the rollout to be smooth and fast.

As far as the current fiscal is concerned, with the 2G spectrum auction raking in a far-less-than-estimated Rs 9,408.crore and the Hindustan Copper stake sale being salvaged only after state-run Life Insurance Corporation came to its rescue, the government is hard-pressed to find ways to reduce the fiscal deficit to the revised target of 5.3% of GDP and avoid a rating downgrade. Finance minister P Chidambaram has issued directives to all ministries to tighten their spending, given the uphill task ahead. Independent analysts peg the fiscal deficit this year to be close to 6%.

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