As the United Progressive Alliance government takes us down the direct cash transfers (DCT) lane, many observers have asked questions regarding the key assumptions that drive the system. If the stated technological benefits do materialize, one would see an incremental improvement in the system of transfer of benefits to the beneficiaries. As senior ministers of the government have been claiming, if all goes to plan, DCTs will be an important step in the direction of fixing the welfare administration. At the same time, there is also an opportunity to push through a comprehensive ‘entitlements’ agenda, if implemented as per design, accompanied by an appropriate legal framework and a sustained information-communication campaign.
First, DCTs will rely on the Aadhaar infrastructure to ensure accurate identification of targeted beneficiaries. Going forward, benefits can be claimed only by those for whom they are specifically intended and not by anyone else claiming to represent one or more individuals.
Second, the new system of DCTs will not by itself improve targeting of welfare programmes in general. In any case, researchers have pointed out, for instance, that in the case of the public distribution system, it may be best to not bother with attempting to target benefits to those living below the poverty line. Therefore, DCTs are likely to work best in a context of schemes that offer universal coverage or cover segments of population with a simple identification criterion.
Third, under the new system, cash will be transferred only to the bank accounts of the beneficiaries. Going forward, scholarships, pensions and such will not be handed over by an intermediary. Also, the last mile in cash payments is to be covered through banking correspondents operating as inter-operable micro-ATMs, a shot in the arm for consumer choice.
From the above, it is possible that DCTs could not only reduce leakages, but also help citizens get the administration on their side in fixing the delivery chain in social welfare schemes. For instance, whether pension or wages were paid or not could be determined straightaway. With fewer points and parameters of authentication, the administration of welfare schemes would be that much less of a ‘black box’, and the resultant transparency should encourage citizens to claim their entitlements. One of the ways for the government to further its attempt to reform the welfare administration is to strengthen the ability of its citizens to stand up for their rights.
I argued in a previous column that DCTs were a great opportunity for the government to put a systematic learning agenda in place; and that on current evidence, this didn’t seem the case. One can argue that some policy decisions need to follow a big-bang approach—make the announcement and wait for the systems to fall into place. Decentralization in Kerala, for instance, is a great example from the early 1990s. In a space of 10 months, functions, functionaries and most importantly, funds were transferred to local governments. This represented a complete reversal of conventional logic with the expectation being that the resources and responsibilities would then lead to capacities, systems and accountability mechanisms. In Kerala, this big bang announcement was accompanied by the People’s Plan Campaign, a thorough and sustained mobilization of stakeholders, including elected representatives, professionals, teachers, civil society, media, etc. The campaign also helped mobilize communities and clarify expectations from planning processes and outcomes.
Will the same follow the launch of the DCT pilot? A 20-district pilot that excludes food, fuel and fertilizers is not exactly a ‘big-bang’ gambit, but it presents an opportunity for the government to strengthen citizens and civil society organizations. At present though, the technology looks suspect and too many of the details are in need of more clarity or testing or both. Be that as it may be, we should not lose sight of the possibilities that lie in store if DCTs can be put to work. Enhancing the ability of citizens’ to access their entitlements is one clear outcome that we should all watch out for.
Suvojit Chattopadhyay is a consultant with over seven years of experience in the implementation and evaluation of development interventions.