Direct Cash Transfer: Civil Services Mentor Magazine April 2013

In a landmark step, Prime Minister Manmohan Singh announced the much-awaited direct cash transfer scheme wherein the subsidy amount will go directly into the bank accounts of the beneficiaries. The government will implement the scheme for cash transfer to the beneficiary’s account in 51 districts from January 1, 2013. Aadhaar card enabled cash transfers, or Direct Cash Transfer (DCT) scheme, which was launched on January 1, 2013, was UPA-led government’s supposed game changer. However, the scheme is yet to take off properly. With the government’s decision that all payments to the beneficiaries, who do not have either bank accounts or their unique identity cards, will be made through the Aadhaar bridge, the administration is on an overdrive to enrol people via enrolment centers. However, even after the patients get their enrolment numbers, it will be at least a month before they get their Aadhaar cards. Earlier, at the Sanjay Gandhi Memorial Hospital, the payment was made through a bearers’ cheque. It seems like the DCT scheme has been rolled out in a hurry with the teams at the grassroot level having a herculean task before themselves to enrol beneficiaries, open bank accounts and integrate them with Aadhaar. “It was not possible for all the schemes to roll out within 10 to 14 days. If the payment is released only through the Aadhaar bridge mode that will be difficult. I think the government has now realised that,” said Shurvir Singh, Divisional Commissioner of North West Delhi.

About Direct Cash Transfer Scheme

It is a poverty reduction measure in which government subsidies and other benefits are given directly to the poor in cash rather than in the form of subsidies.

What are its benefits?

It can help the government reach out to identified beneficiaries and can plug leakages. Currently, ration shop owners divert subsidised PDS grains or kerosene to open market and make fast buck. Such Leakages could stop. The scheme will also enhance efficiency of welfare schemes.

How is it Implemented?

The money is directly transferred into bank accounts of beneficiaries. LPG and kerosene subsidies, pension payments, scholarships and employment guarantee scheme payments as well as benefits under other government welfare programmes will be made directly to beneficiaries. The money can then be used to buy services from the market. For eg. if subsidy on LPG or kerosene is abolished and the government still wants to give the subsidy to the poor, the subsidy portion will be transferred as cash into the banks of the intended beneficiaries.