UIDAI’s Direct Cash Subsidy Transfer Not Panacea – Massive Corruption Still Exists

During our field trips, at least in the MNNREGA programme, we could not find evidence of Aadhaar-based cash transfers having the ability to plug leakages completely. Although identity-based transfers would weed out ghost recipients, the cash transfer scheme had no way of dealing with inflated muster rolls in the first place. Hence, leakages may still happen with collusion between the beneficiaries and the contractors and government Officials.

The other systemic weakness we construed was dependence on the integrity of the Business Correspondents [BCs] for the system to work effectively. Given the evidence of banks’ preference for the BC channel and the lack of means to verify bank account credits and balances easily, a corrupt BC might become an important source of leakages. A printed receipt is of little help when many of the beneficiaries are illiterate.

The most important glitch that cannot be addressed by the new system is the lack of timely credits in beneficiary’s bank accounts. The new system is intended to transfer benefits efficiently without leakages. It is outside the scope of the Aadhaar system to ensure that the government transfers funds on a timely basis. In our field trips, we found that NREGA payments received at that point in time actually pertained to work done almost a year ago.

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