Editorial: Direct control

Jul 29 2013, 05:02 IST
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SummaryGiving finmin charge of DBT scheme a good idea

Given that, by and large, it is the absence of bank accounts that is the biggest bottleneck in the spread of the direct benefits transfer (DBT) scheme, the prime minister has done well to shift the office of the DBT mission director from the Planning Commission to the finance ministry. In the scheme’s first phase in 43 districts in January to March, just R40 crore got disbursed. While it is possible to argue this poor performance had to do with district level officials — often in Opposition-run states — the logic didn’t hold for DBT in the case of LPG since everything here was in direct control of the central government. The 3 oil companies who sell LPG are PSUs controlled by the petroleum minsistry and the banks who would get the cash are controlled by the finance ministry. Yet, in the 7 weeks the scheme has been in operation in 20 districts, just 2.8 million people have been given their subsidy benefits as compared to the 7.6 million the scheme has to cover.

While it is true the progress of getting Aadhaar numbers has been slower than what was expected, the bigger issue is connecting (seeding, in DBT jargon) these Aadhaar numbers to bank accounts or post office accounts where the funds can be directly transferred. While there is an issue in terms of getting the digital signatures of officials concerned, the lack of bank accounts is the more severe problem. RBI has issued a directive to banks, on July 9, asking them to take steps to open bank accounts and to seed them with Aadhaar numbers, to display the names of banking correspondents in various villages. While this is a big positive, RBI has also been directing banks for years to set up no-frills accounts. With no incentive to do so, naturally enough, banks have been lax in doing so. With DBT now the finance ministry’s baby, chances are banks will take this directive more seriously now and open the necessary accounts as well as ensure they are linked to Aadhaar numbers. While the FM’s daily monitoring is clearly a good idea, what would be better would be to re-look the scheme to provide incentives for banks to want to set up and service such accounts — this is even more important when banks have to, in small villages, use the services of banking correspondents. If concerned R2 lakh

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