Cash transfer won't fuel inflation, benefit only by March: Montek

The benefits of the cash transfer scheme to be rolled-out from 1 January in 51 districts will reach the intended beneficiary only by February-March, said Planning Commission Deputy Chairman Montek Singh Ahlwualia.

In an interview to Karan Thapar for CNN-IBN programme 'The Last Word', Ahluwalia also dismissed the criticism that government's ambitious cash transfer scheme would fuel inflation.


He favoured the suggestion that the subsidy meant for families should be transferred into the account of women. The government proposes to roll-out the Aadhaar-enabled cash transfer for 29 schemes from January 1 in 51 districts, spread over 16 states. It also plans to cover the entire nation by the end of December 2013. Later, the cash transfer would cover all the 42 welfare schemes being operated by the government.

"It is not my understanding that on January 1 every scholarship in these districts is going to be paid out through Aadhaar. Rather we are starting the roll out process but could take a month or two thereafter," Ahluwalia said.

He further said, "Where the purpose of the transfer is linked to the benefits of a family, be it nutritional benefit, be it family benefit, it would be much better to send it to the mother."

There may be a problem in case there is no female in the family, he said, adding "by and large, we ought to give to the female head of the family in the household".

On the possibility of cash transfer scheme fuelling inflation, Ahluwalia said, "not at all." Answering questions on FDI in multi-brand retail, he said it would help in modernising the retail to the benefit of farmers and consumers.

Allaying fears that the introduction of cash transfer and allowing FDI in multi-brand retail would result in dismantling of public procurement of foodgrains, Ahluwalia said, "The Minimum Support Price (MSP) has nothing to do with FDI in retail. We are really trying to modernise the retail."

He assured that the government would continue to procure and supply foodgrains under the existing public distribution system.

About the huge US farm subsidies, he said the American government subsidises farmers not because their marketing is inefficient but because their agriculture is uncompetitive at the prices which their consumers are willing to pay.

Ahluwalia said the US subsidies agriculture heavily to keep the consumer prices low and at the same time have high farmer income.

In case of India, he said, the government wants to keep consumer prices as low as possible and raise farmers income by squeezing inefficiency in the middle.

According to him, the US does not have inefficiency in the middle and the European agriculture is also only competitive if it is subsidised.

About the apprehensions that in the absence of good roads and access to electricity in remote areas, the foreign players would not be able to set up back-end infrastructure to improve logistics, Ahluwalia said, "We are spending a lot on roads and power."


Updated Date: Dec 20, 2014 14:24 PM

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