Does the direct cash transfer scheme work? Kotkasim residents say no

Ramvir Singh feels cheated. A resident of Kotkasim town in Rajasthan, he was told by the fair price shop dealer in December 2011 that he would not get kerosene at a subsidised rate (Rs 15 per liter) anymore. As part of the cash for kerosene scheme, he would have to busy kerosene at market price (Rs 44.5 per liter) and the subsidy would be transferred into his bank account. A year later, Singh, who was in Delhi on Thursday to protest against direct cash transfer scheme, claimed that he is yet to receive any subsidy even as he buys kerosene at the market rate.

Ramvir Singh, resident, Kotkasim, Rajasthan. Naresh Sharma/ Firstpost

Subhash, another Kotkasim resident, also faced bitter experience. Subhash, a carpenter, holds an APL (above poverty line) ration card and is a regular user of kerosene for cooking and lighting. In January 2012, his bank account was opened in the Grameen Vikas Bank. But he has not yet received his passbook and the family presently buys kerosene from the black market at Rs 35 per litre.

Launched as a pilot project in December 2011, the cash for kerosene seems to have got a thumbs down from the residents of the non-descript town in Rajasthan’s Alwar district. The complaints range from arbitrary cash transfers to blackmailing by dealers, and pressure from banks to maintain cash in what are supposed to be zero balance accounts. Experts say that the scheme should be replicated on a larger scale only once the government has plugged loopholes similar to the ones faced in Kotkasim.

A study done by the office of the advisor to the Supreme Court commissioners, Right to Food, describe the scheme as ‘denial by design’ as it links the kerosene supply to bank accounts.

The survey notes that the drastic fall in kerosene consumption in Kotkasim- currently the average consumption is not even five per cent of kerosene use before the pilot project- is not a pointer to the removal of black marketers or hoarders from the system, but indicates the manner in which people have withdrawn from the system.

Contrary to the district administration claim that there is no effective demand for kerosene, three fourths of the poor families use kerosene and need to buy it from the ration shop, notes the survey.

Among the reasons which deter people from buying kerosene, are high cost, long procedures and formalities.

Pariticpants at the protest against direct cash transfer scheme on December 13 at Jantar Mantar, Delhi. Firstpost/ Naresh Sharma

“The opening of no frill bank account is central to the system. However, it has confined the reach of kerosene to the beneficiaries. At the time of launching of scheme, only 6,000 bank accounts were opened in Kotkasim town. At present, a mere 58 per cent of eligible account holders have bank accounts," said Dr Asok Khandelwal, advisor Rajasthan, Supreme Court Commissioners, Right to Food.

The new system has also drawn flak from kerosene dealers as it undermines the viability of fair price shop and reduces sale.

“Sale is down from around 3000 liters per month (pre- pilot launch) to 500 liters. But my commission remains 90 paisa per litre. It is not commercially viable,” said Suraj Bhan Yadav, a kerosene dealer from Kotkasim.

Experts have also criticised the government for not coming clean on the schemes which will be linked to direct cash transfer.

On 10 December, KV Thomas, Union Minister of State for Food and Consumer Affairs said in the Rajya Sabha that Kotkasim model will be introduced for food grains in six Union Territories.

Following day, Jairam Ramesh, Union Minister, Rural Development, wrote in The Hindu that subsidies on food and fertilizer have not been included in the first phase.

“They don’t seem to be on the same page on this issue. There is utter confusion here which is a cause for concern," said Reetika Khera, development economist and assistant professor at the Department of Humanities and Social Sciences, IIT, Delhi.

Updated Date: Dec 15, 2012 09:28 AM

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