Cash transfers: Come polls, NAC views go into dustbin

If any proof is required that the direct cash transfer scheme is little more than a vote buying gambit, here it is: as long as elections were not in sight, the Sonia Gandhi-led National Advisory Council (NAC) was given a huge say in policy. Now that 2014 is clearly visible, NAC is out in the cold.

And nowhere is this more obvious than in the way NAC members have been shouting from the rooftops that the Aadhaar Unique ID number and cash transfers are not a panacea. They aren't being heard, with Rahul Gandhi himself saying that cash transfers will win the Congress the next two general elections.

According to a story in The Indian Express, four current members of NAC and two former members have expressed serious reservations about the cash transfers scheme, which the government wants to introduce in 51 districts from 1 January, and cascade it to the whole country by end-2013. This is being done as the Congress party thinks putting money directly in the hands of people is a vote-winner.

When it comes to giving Sonia Gandhi a platform from which she can tell the government what she wants, the NAC is indispensable. AP

If NAC is getting the deaf ear treatment from its boss, the reason can only be this: When it comes to giving Sonia Gandhi a platform from which she can tell the government what she wants, the NAC is indispensable. But when it comes to elections, the NAC is dispensable.

The Express says that Deep Joshi, AK Shiva Kumar, Farah Naqvi and Aruna Roy - all current NAC members - along with former members Jean Dreze and MS Swaminathan have backed a statement issued by "200 academicians and activists" who "oppose" the government's plan for "accelerated mass conversion of welfare schemes to UID-driven cash transfers".

To be sure, the statement does not object to cash transfers per se - after all, when welfare payments are actually given out in cash, it makes little sense to oppose cash transfers. Their objection is to the unseemly haste with which it is being pursued. They say flagship welfare schemes like NREGA should never make UID a "condition for anyone to access any entitlements or public services".

But this is precisely what the government seems to be pursuing - force people to take up UID numbers even when there is no need to. The UID Authority of India is collecting the biometric data of private citizens without any kind of legislative support.

Today's Economic Times notes that Aadhaar is now being prescribed even by the Employees Provident Fund Organisation (EPFO), a scheme where most payments are made only through direct cash transfers to bank accounts.

The report, quoting a labour ministry directive of 20 December, says the EPFO has been asked to "embed" the Aadhaar number in the bank accounts of beneficiaries in 43 districts by 31 December. "There is an urgent need to seed (or embed) Aadhaar numbers in the (bank) accounts of beneficiaries who receive benefits under the various schemes of EPFO. The ministry has decided that seeding of Aadhaar numbers of beneficiaries be completed by December 31, 2012, for 43 districts, and for beneficiaries in other districts as early as possible."

At a time when Aadhaar has been rejected by the parliamentary committee examining the relevant laws, and when the EPFO law itself does not require payments to be linked with Aadhaar numbers, one wonders why the labour ministry is pushing the scheme so hard?

Speaking at a Delhi meeting last month, NAC member Aruna Roy opposed elements of the cash transfer scheme, which the government says is vital to rooting out corruption in welfare payments. BusinessLine quoted her as saying: "Corruption cannot be reduced by technology alone. This is just a move to control and track people and push the UID (unique identity) project."

The problem, as Firstpost has noted before, is not about cash transfers per se. The problem is the haste with which it is being implemented without proper testing in the hope that it will win the Congress party the next election.

Cash transfers are much the norm in the organised sector, especially in urban areas, as everything from salaries to pension payments to share trading to IPO investments are made through an electronic system of credits and debits to bank accounts.

But urban voters are not going to vote Congress merely for cash transfers. It is rural voters who may do so, if money suddenly clinks into their accounts like magic.

And this is where NAC has its problems. But then when it comes to elections, Sonia Gandhi does not listen to the NAC. The NAC's role, it seems, is only to remind the government between elections who's the real boss. At election time, Sonia listens more to ideas on how taxpayer money can be used to impress voters. The NAC can like it or lump it.