PM launches Aadhar based direct cash transfer system

Battled by corruption on all fronts, PM Singh inaugurated the scheme to do a direct cash transfer system to the intended beneficiaries directly through bank accounts linked to the AADHAR number. This scheme is good and is a good step in the direction to plug corruption at various levels. However, it is still not passed as a  Legislation. The Parliamentary committee has objections, concerns that have not been addressed. The govt's announcement of the scheme leaves behind several questions unanswered.

Many of the concerns/questions are raised even in my previous 3 articles listed here - Article1, Article2, Article3.

As of 2012, 20 crore people people have got AADHAR numbers and 40 crore are left as against the target set for 2014. The system and its officials are making their presence felt in many villages and cities. Poor people are specially thrilled and are going out in large numbers to get the number. Here is the website (click) that gives all the information on how to enroll, what documents are needed and what the process is.

Image courtesy: source

The Govt wants to show that it wants to do something. However, no one is sure how this system will transform the problem of corruption. India's corruption is at different levels and this kind of a system will be a game changer for sure only if correctly implemented.

The media doesn't scrutinize effectively enough. How many Indians know that the experiment of Aadhar enabled wage pay under Rural Employment Guarantee system is facing difficult problems for which no effective solution has been found? Unless found the scheme should not be extended to the entire country. 

Here are some of them:

1) The system requires that a bank account opened by a person who has AADHAR must be interlinked. So, just because you have AADHAR number will not enable you and just because you have a bank account won't enable you to receive payments. Is this effectively communicated since large number of people would not understand? In Jharkhand, this created a major problem since people who had to open a bank account had to travel 10 km away. The role of Banking Correspondents (BC) carrying portable devices that can communicate with the bank servers is not foolproof system and has failed in many places. So, how does AADHAR address this issue?

2) In several places where the internet connectivity is either unavailable or unreliable is a major issue. This did not allow the verification systems to work properly with authentication servers.

3) Fingerprint recognition issues made many legitimate recipients not receive the money. Given the fact that most laborers may not have the right finger prints due to excessive labor what other mechanism should be adopted to verify? Are the guidelines that are laid being correctly followed everywhere the system is put in place?

4) How correctly can you identify the recipient is indeed the intended beneficiary? For a scheme like Rural Employment it might be easy since the person who is going to work needs would have his name registered and must be working for a certain set of hours. While making the payment his name must be associated with AADHAR number that the recipient must carry while validating/authenticating himself. This may be fairly accurate but how does government plan to transfer food via PDS (Public Distributed System) ? Clearly, as per UIDAI AADHAR number cannot tell you if you are an intended recipient of a particular service, but only verify that you are what you say. So, say a person A who is not a legitimate recipient of subsidized kerosene but has an ADHAR number registers in the government records as the beneficiary of subsidized kerosene Then person A continues to receive the benefit if he submits AADHAR details. So, even before AADHAR comes into play the very system which will contact AADHAR must be accurate. Has the government done or doing anything in this regard? Unfortunately, no. So, can this system be a game changer then?

5) It has come to the attention that several hundreds of AADHAR cards are lying in the government offices gathering dust and yet have not reached the concerned people (Source) This is mainly because of fake addresses.

Say, the UIDAI addresses all these issues. However, until issue 4) is resolved this system cannot help in plugging leakages.

Let us not forget in Jharkhand where the system was first tested proved to be very effective at least with respect to people who received their wages. It was quick, fast, instant and no middle man was involved. So, they did not bribe any official to get their money. This is truly the result that is expected and is indeed the spirit with which Mr. Nilekani is working. 

So, when Arvind Kejriwal talks about an effective law people must realize that it is one part of the solution. The other part is clearly eliminating as much as possible middle men who eat away the money before it reaches the intended recipient.