Direct Cash Transfer Scheme: Is It For The Pockets Of The Poor Or Our Politicians?

Posted on February 27, 2013 in Specials

By Anush Garg:

The Congress party’s manifesto says: “The Indian National Congress promises what it can do and will do what it promises”. One of these promises was the Direct Cash Transfer Scheme, which included 29 welfare schemes. Through the DCT scheme, the UPA government proposed to bring direct change to 10 lakh households in 16 states.

On the international agenda, the World Bank and United Nations Development Programme have backed up the flawed scheme set up by the UPA government; this support comes despite the previous experiences of three countries- Brazil, Chile and Mexico. These countries had similar cash transfer schemes, however, these are lesser populated countries with higher income rates, literacy rates and have a higher degree of urbanization and therefore cannot match up to the huge illiterate population of India. The government is trying to use the current technology to line up the procedure for the DCT. To make itself effective, the DCT scheme requires the help of two pillars. Firstly, the ‘Aadhaar card’ (Unique Identification Number) that is to be used as an identity and the second are banks, which would directly provide cash as subsidy to the poor and the underprivileged.


The Aadhar card is now allotted to 21 crore citizens of India, but linking of Aadhar to bank accounts has still not been completed. The private-owned banks have been reluctant towards providing services in the rural areas, as they do not offer no-frills since they are primarily in the finance sector to make money and not for providing facilities which are the pre-requisites for the DCT scheme. The government owned banks are in rural areas but the branches available are already working over capacity. I therefore believe that the infrastructure must be built before starting a scheme and not vice-versa.

In my opinion, there is a basic flaw with the scheme and I am voicing my opinions regarding this. The men of rural India should not be given direct advantage by virtue of this scheme. It would be better if it is thoroughly meant for women, as they are responsible for the household needs such as food, health, education, kerosene, LPG etc. If the male member receives cash from the government on behalf of the family; it is most likely that due to illiteracy and scarcity of civic sense, he will spend the cash on liquor, gambling and other things which will in turn harm the family.

Within this DCT scheme, the Government of India will transfer approximately 3,20,000 crore rupees. The government is hurrying this scheme through to aim for the 2014 Lok Sabha elections. This also means that it could be a bribe to the poor, in my belief.

The ground realities are the several gaps in infrastructure, like shortage of energy, IT infrastructure, technicians and the involvement of private banks has forced the congress to reduce its initial target from 51 districts to a mere 20 districts in the first phase of DCT. Similarly, when FDI in retail was given permission by the parliament, I went into a serious thought as to how the economy of our nation will manage to support the major challenges brought by the retail giants. The big question that we are faced with is, “where will that entire infrastructure come from?

I therefore believe that this is another gaffe just like the MGNREGA scheme which was meant to bring employment to the unemployed. The same MGNREGA scheme where the government was accused of a scam worth multi-million rupees. Can a similar scam happen under the DCT scheme where 3,20,000 crore rupees are at stake?