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Nov 30, 2012 at 12:04pm IST

Rs 3.2 lakh crore cash transfer is an old promise and a game changer: UPA

New Delhi: The United Progressive Alliance (UPA) government on Tuesday furnished the outline of its ambitious direct cash transfer scheme, with Union Finance Minister P Chidambaram terming it as a big political game changer.

Addressing a press conference at the Congress party headquarters, the Union Finance Minister said that the scheme would be launched in 51 districts in its first leg, and present operational 42 schemes of the government, including those from the Health Ministry, would be part of the scheme.

Referring to the modus operandi of the scheme, Chidambaram said that subsidies would directly be credited to the bank accounts of the beneficiaries. He further pointed that the move by the government would eliminate falsification and duplication with regard to subsidies.

The Union Finance Minister also took the opportunity to hit out at the main Opposition party, the Bharatiya Janata Party (BJP), which had accused the government of trying to bribe the voters ahead of the 2014 general elections with the direct cash transfer scheme.

When asked about the allegations of the BJP, Chidambaram reacted angrily saying, "It is an absurd argument of the BJP to say we are bribing people...I do not get a stronger word than absurd. People should choose their words carefully."

Talking about the scheme, the Finance Minister said that the first phase of launch to involve 16 states, and he expected Aadhaar Penetration to be above 80 per cent in the 51 districts by December 2013.

Pointing that the beneficiaries would not have to pay any money to get the benefits, Chidambaram said that banks would be the distribution point for cash subsidy initially. He added that the district collectors would be sensitised about the programme. The almost Rs 3,20,000 crore cash transfer scheme will be launched in stages and cover the entire country by the end of 2013, said Chidambaram.

Union Minister for Rural Development Jairam Ramesh, who also addressed the press conference, said that the direct cash transfer scheme was a part of the Congress manifesto in 2009. He said, "We are fulfilling a promise we made in 2009."

He further said that the move was nothing less than a political revolution, adding that a meeting of several state level officers would soon be called over the issue. He further said that Congress general secretary Rahul Gandhi would address the meeting of the officials and Chidambaram would also furnish the details of the scheme during the meeting.

What is cash transfer?

In lieu of subsidised food, fertilizer and fuel, BPL families would get 30,000-40,000 a year in their bank accounts. In all, Rs 4,00,000 crore will be disbursed. APL families too would get money for subsidised cooking gas.

How will it work?

Families with Aadhar card, entitled to subsidies, pension, scholarships etc, will get money directly in their bank accounts. For this, they need to give their Aadhar card number to service provider, say, gas agency and bank. Option will exist to claim the cash subsidy at designated bank branch, by using a cash card.

What will it cover?

To begin with, only subsidy transfer for cooking gas. Centre has asked states to launch pilots for food subsidy. Work on fertilizer subsidy has just begun and over time, it will cover all subsidies.

When will it start?

There's a pilot project for kerosene in Alwar district while a test is being run for cooking gas in Mysore. By January 1, 2013, 51 districts with high Aadhar penetration will be covered. By December 2013, the whole country will be covered.

Why is it being done?

It is being done to check leakages from the system and give power of choice to beneficiaries, especially BPL families. Ahead of the 2014 elections, it is seen as big political thrust.

Can it falter?

Yes. Only 21 crore of 120 crore people have Aadhar cards. Most BPL families don't have bank accounts and several villages don't even have bank branches.

The first announcement about Direct Cash Transfer was made the then Finance Minister Pranab Mukherjee in his Budget speech on March 16, 2012. The announcement was made in paras para 23, 24 and 25 of the Budget speech and the first press release on the same was issued by the PMO on September 28.