Posts Tagged ‘cash transfers’

Demonetization – Phase 2 – from cash to cashless

The first month of demonetization has been a trying one: long queues, frayed nerves, some panic and the usual meaningless political drama. Now that the genie has been let out of the bottle, it makes more sense to work out the future steps than to flog the dead horse. I chanced on a news item where a Pune-based not-for-profit outfit, Arthakranti, has claimed credit for planting the idea in the Prime Minister’s brain. Unfortunately, they have also pointed out that, of their recommendations, the government of India implemented only one. Since not many would have gone through their suggestions, I am detailing them below, along with my views on the way ahead, as well as two critical issues that will need a push from the government if the cashless economy is to become a reality in the not so distant future.

Withdrawal of high denomination notes (₹ 1000, 500 and 100) from circulation was the one recommendation that has largely been implemented. Arthakranti had, however, proposed a phased withdrawal programme starting with the ₹ 1000 note, then the ₹ 500 note and finally the ₹ 100 note, spread over three six-month periods, with an adequate supply of newly printed notes of the next lower denomination to substitute for the withdrawn currency note. Finally, the highest denomination note in circulation was to be the ₹ 50 note. Without trying to guess the compulsions of the government in rushing through such a monumental process in fifty days without ensuring adequate supply of currency of legal denominations, there is no denying that much pain has been caused to the general public, apart from the man-days lost in queues and the depression in economic activity just when the kharif crop has been harvested and the rabi sowing is due. Having done what it did, the government should now move towards a gradual phase out of the ₹ 2000 and ₹ 500 notes, probably over the next 12 to 18 months, with adequate provision of ₹ 100 notes to avoid the situation we went through in November. I would advocate continuing with the ₹ 100 note for at least another three to five years till cashless payment systems are firmly established as the preferred transactional mode.

A cap on legal cash transactions of ₹ 2000 has tentatively been proposed by Arthakranti. Given the large number of unbanked Indians and the gestation period that will be needed for cashless payment systems to be put in place, I would be more comfortable with a cap set at ₹ 10000 for the period when the ₹ 100 note continues to be legal tender, with the cap being reduced to ₹ 5000 once ₹ 50 is the highest currency note in circulation. Any transaction in cash above this cap should be made illegal and liable for punitive action.

The truly revolutionary recommendation of Arthakranti is the replacement of all domestic direct and indirect taxes (central, state and local) by a banking transaction tax (BTT), with only import and export duties continuing in respect of internationally traded goods and services. This is tantamount to killing many birds with one stone. Coupled with the cap on legal cash transactions, this brings every transacting citizen into the tax net. Any transaction through a bank account (with automatically attached Aadhar and PAN card details) attracts a BTT of 2 percent, as suggested by Arthakranti. The BTT is added to the transaction value and deducted from the amount realised by the payee. The BTT realised is shared between central, state and local governments and the banking intermediary. With the tax net covering all transactions over ₹ 10000 (ultimately ₹ 5000), the system can be revenue-neutral even at a rate which is barely 7% of the currently highest marginal income tax rate or 10% of the anticipated GST rate. The ordinary citizen will be spared the ordeal of filing direct and indirect tax returns, an exercise that today taxes even the most nimble-minded chartered accountant. Governments at all three levels can save money on the huge army of tax inspectors, assessors and enforcers in departments ranging from income tax and central excise to state excise, land revenue, stamp duty, registration fees, commercial taxes, road tax, entry tax and property tax. User charges paid online will not only accrue immediately to the concerned department/agency but revenue receipts to the concerned governments and banks will also be instantaneous. The BTT would also cover agriculturists, who are out of the income tax net for political reasons, despite the recommendations of the K. N. Raj Committee over four decades ago. Most importantly, black money generation through corruption and tax evasion, and its conversion from cash to other asset forms like real estate and jewelry, can be checked.

Reaching out to the huge unbanked portion of the Indian economy requires, as a prerequisite, a digital revolution: the cashless economy can be built only on the foundations of a digital economy. Efforts to promote cashless payments and cash transfers in MGNREGA and the PDS have foundered on the absence of virtual connectivity in large swathes of the country. With banking services not covering even the last ten miles, let alone the last mile, banking correspondents, armed with point-of-sale machines, and mobile wallets are probably the major means by which money can be accessed. This, however, requires microwave towers, with reliable electric supply. Where the terrain does not suit microwave tower connectivity and where electric supply is yet to reach (which are the areas where the most disadvantaged sections of Indian society live), there is need to rely on satellite connectivity coupled with towers powered by solar energy. A second concern is that of cyber security. With increasing criminal infiltration of cyberspace, development of secure, encrypted systems is the need of the hour to avoid economy-wide disruption of financial systems.

Demonetization was initially promoted as the solution to check tax evasion and corruption and deal with counterfeiters and terrorists. With growing public irritation and the downturn in business, the government has started trumpeting the virtues of a cashless economy. This requires a paradigm shift in technology and in individual mindsets. But above all, it requires certain crucial reforms in other sectors of our democracy and polity. I will deal with these in a future blog.

Palghar – lessons for Maharashtra (and other states)

It was that time of the year again…the rains came and, with them, the sense of déjà vu that stories of child deaths in tribal areas of Maharashtra evoke in the public mind. The procession seems endless: Melghat in the 1990s, then Nandurbar in the first decade of this century and now Palghar in the second decade of the twenty first century. The political and administrative actors have changed in the intervening years, economic and social changes have taken place in town and countryside but the same problem seems to return to haunt us with a recurring, almost numbing regularity. Opposition politicians (who seem to forget that they were in power for a decade and a half till very recently) are ready with their criticism of the first two years of the present ruling dispensation. The usual knee-jerk reactions are on full display, with Ministers of the concerned departments undertaking flying visits to the affected areas and attempts being made to rope in the medical fraternity, nonprofits and civil society to tackle the problem. Unfortunately, there is no well thought out strategy to tackle the problem of child malnutrition on a long-term basis, whether it be in Maharashtra or in any other state in India. It might, therefore, be apposite to outline what should not be the focus of public policy in the immediate future — both short and medium-term — and what strategy could yield handsome dividends in the next few years.

What is definitely a losing proposition is the obsessive focus on the centralised supply of nutrition to affected mothers and children. There seems to be a misconceived notion (at various levels of government, nonprofits and civil society) that augmenting supplementary nutrition to mothers and children through the existing channels of the Integrated Child Development Services (ICDS) system will help matters. The past (and more recent) history of state-directed and centralised nutrition provision through the ICDS system has been controversial, with repeated attempts (across many states) to circumvent the Supreme Court-directed policy of empowering local communities and families to meet the nutrition requirements of their mothers and children. The experience, over the last one year, of the Abdul Kalam Amrut Aahar Yojana in Maharashtra, aimed at providing one hot cooked meal to pregnant mothers and to nursing mothers in the first three months after delivery, has not been very heartening either, given the less than enthusiastic involvement of the ICDS machinery and the glitches in timely fund allocation to local committees tasked with provision of the nutritious meal. Since the National Food Security Act, 2013 has mandated a cash maternity entitlement of Rs. 6000 to mothers, in addition to access to food supplies through the Public Distribution System and through specific nutrition programmes for pregnant and nursing mothers, the possibility of cash transfer of the entire entitlement to women through Aadhaar-linked bank accounts needs to be closely looked at. This would not only check programme leakages but also reduce wasteful expenditure on overheads on state-run programmes. However, this requires a separate study, so the issue will not be further pursued here.

Reducing chronic malnutrition in under-5 (“U5”) children is a process that involves factors like accelerated economic development and the behavioural changes that rising income levels bring. But, rather than passively waiting for economic development to reduce child malnutrition, governments (and their extensive machineries) can take proactive steps in the short-term to reduce acute malnutrition (and the accompanying mortality) in U5 children. This article focuses on these measures.

The first step is the use of real-time, accurate data, based on anthropomorphic indicators, to get a grip on the exact geographical regions (going right down to every individual anganwadi) where child malnutrition levels are highest, be they remote tribal hamlets or congested urban slums. Currently, monthly recording of weight for age (based on the WHO growth norms) is the only criterion used to assess child undernutrition in the ICDS. This exercise is carried out (if at all) perfunctorily in anganwadis in most states in India. In any case, no systematic analysis of this data, for policy planning and implementation purposes, is undertaken by any official of the departments or directorates/commissionerates tasked with improving the status of child nutrition in India. What is needed is a rigorous exercise to weigh all children in the state every month. If this is not done monthly for logistic reasons (although required as per the existing job chart of the anganwadi worker), weights of all U5 children should be scrupulously recorded at least once in two months. The Jatak software, already developed for use in some areas of Maharashtra, Kerala and West Bengal, would enable porting child weight data online through use of interactive voice response systems and obtaining immediate anganwadi-wise data on the number of severely underweight (SUW) U5 children.

Step number two would involve the lists of these SUW children (anganwadi-wise) being made available online (through a web-based health module linked to the Jatak SUW child data) to the Primary Health Centres (PHC) in whose area the anganwadi falls. The Auxiliary Nurse Midwives (ANMs) and Accredited Social Health Activists (ASHAs) working in a PHC area would then record the height/length and weight of each U5 SUW child in the health sub-centre area, with this data being subsequently ported into the health module. The software would automatically provide to the PHC, anganwadi-wise, the list of U5 children falling in the severe acute malnutrition (SAM) category.

Once the U5 SAM children are identified, they need to be medically examined to assess whether their condition requires them to be admitted to Nutrition Rehabilitation Centres, also termed as Child Treatment Centres (CTCs) and located in Primary Health Centres. Children suffering from environmentally induced diseases (tuberculosis, pneumonia, etc.) or congenital conditions (sickle cell anemia, heart disease, etc.) would be admitted to CTCs. Apart from children requiring treatment at specialist medical facilities, others would stay in the CTCs for a period of up to thirty days. The treatment protocol prescribed by the WHO would be followed to improve the health and nutrition status of these SAM children. It would also be desirable to provide health, hygiene and nutrition education to the caregivers (mostly mothers) who stay with the children in the CTCs, so that there is no relapse in the nutrition status of the children after their return home. Maharashtra had started the salutary practice of providing an allowance to the caregiver staying with the child in the CTC to compensate for loss in wages; this was an added incentive to ensure that children were admitted to and underwent the full course of treatment in the CTCs.  Monitoring of the health and nutrition status of these children by health workers needs to be done regularly for one year after their discharge from the CTC to ensure there is no relapse.

Children in the SAM category not requiring medical attention can, along with children in the moderate acute malnutrition (MAM) category, attend the Village Child Development Centres (VCDCs) at the local anganwadis to receive supplementary nutrition at two hour intervals in accordance with a laid-down nutrition protocol. As the pioneer in developing the VCDC concept, which has been internationally acclaimed, it is unfortunate that the Government of Maharashtra has not financially supported this initiative for the past three years.

Zeroing in on the geographical areas with the worst incidence of severe wasting (SAM) in U5 children would definitely reduce child mortality, given that SAM children have a mortality rate over nine times as high as children in the normal category. It would also check the impairment of cognitive and physical capabilities of U5 children, enabling them to lead fuller, more productive lives as adults. The tragedy lies in the failure of governments in India to systematically adopt the approach outlined above. My experience as Director General of Maharashtra’s Rajmata Jijau Health and Nutrition Mission is that, when U5 child mortality occurs, no attempt is made to trace the case history of such children: specifically, their nutrition and health status in the months before their death and whether any efforts were made to improve this status. A systematic use of real-time U5 children nutrition data to enable focused health and nutrition interventions followed by rigorous monitoring of treated children on an ongoing basis would help reduce mortality rates. Even using the current ICDS projectwise monthly progress reports (MPRs) on U5 children nutrition status (in terms of child weights) would give some idea of the areas in a state most prone to child malnutrition. If we examine the latest available ICDS MPR for Maharashtra for March 2016 (available at, we observe that the ICDS projects with the highest percentages of severely underweight children are largely located in the tribal pockets in the districts of Palghar, Nandurbar, Amravati, Nasik and Gadchiroli, the very areas which have been at the centre of child death controversies for over two decades. If all the ten states of India with a percentage of SUW children over 10 percent of the U5 child population, as revealed by the 2013-14 Rapid Survey on Children (RSOC) data released by the Ministry of Women and Child Development, Government of India, were to rigorously monitor the monthly weights of children, they can put in place strategies to tackle SAM and reduce mortality in U5 children in the high burden areas.

India has the rather dubious distinction of being ranked 120 out of 130 countries in the prevalence of wasting in U5 children (Global Nutrition Report 2016). The 2015-16 National Family Health Survey (NFHS-4) shows that large states like Maharashtra and Madhya Pradesh have as many as 14 (out of 35) and 23 (out of 50) districts respectively with a severe wasting (SAM) rate of over 10 percent of the U5 child population, while U5 child mortality rates are as high as 58 and 65 (per 1000 live births) respectively for Bihar and Madhya Pradesh. So what holds our governance systems back from taking positive, proactive steps? Firstly, a complete absence of focus on what is the extent of the problem, where the problem exists and what policy measures are needed. Secondly, a failure to enforce accountability (in the ICDS and public health bureaucracies) for high rates of child malnutrition and mortality. And, finally, indifference to the debilitating consequences of child malnutrition, which society and the polity contribute to through inaction on a variety of fronts and a lack of compassion.

Reaping the wages of state oligopoly/monopoly

I recently read a lament by India’s Surface Transport Minister, Nitin Gadkari, on how vested interests were thwarting the passage of the Road Transport and Safety Bill in Parliament. One would have thought that legislation aimed at reducing India’s horrendous record of road fatalities/injuries (1,50,000 fatalities and over 5,00,000 injured in the calendar year 2015 alone) would have received widespread support and would have passed through both Houses of Parliament in a jiffy . Alas, this bill languishes, like many others, while the God of Death continues to add to his numbers. And the sneaking suspicion lingers that powerful lobbies are at work to forestall the coming of this law. The commercial road transport lobby is against any measures that would require them to invest in new, safer transport vehicles. The bare-headed idiot wants to ride his scooter/motorcycle without the impediment of protective headgear, blissfully oblivious to the implications for his life and the future of his family. Above all, the state road transport authorities are totally averse to what they see as this encroachment on their divine right to extract economic rent from the licensing and operation of motor vehicles, which is why the transport portfolio is one of the most sought after by politicians. This huge state oligopoly (actually a monopoly in any one state) has been responsible for a large part of the mess in India’s road transport sector. Visit any state road transport office and you can hardly miss the ubiquitous tout peddling his wares in full public view. Every service has a price, whether it is the registration of a new vehicle, the transfer of vehicle registration from one state to another or the issue/renewal of driving licenses. No wonder even the Minister admits that at least 30% of driving licenses (almost certainly an underestimate) are wrongly issued. The road transport imbroglio goes even further. A mobile, globalised economy requires frequent labour movements. But move to another state with your vehicle and the authorities are after you to pay your lifetime road tax afresh in the new state. Take a private taxi from one state to another state and you end up paying for the privilege of entering that other state: an amount that varies from ₹ 1000 for Andhra Pradesh to ₹7000 for Maharashtra. Road transport checkpoints (along with other state monopoly agencies extracting their pound of flesh) are responsible for interminable delays in shipments to other countries and adversely affect India’s export competitiveness. But who cares: certainly not state governments, which are interested only in short-term revenue collection.

Things are only marginally better in the sector that fuels the transport sector. In spite of valiant efforts by reform-minded administrators to introduce free markets in this sector, supply of petroleum products has remained the preserve mostly of the three public sector marketing giants. Political patronage played a significant role in the allotment of dealerships in petrol pumps and cooking gas, a fact which attracted adverse attention of the higher courts about two decades ago. Politically powerful owners of these distribution agencies consider themselves immune to punitive action even when they supply adulterated fuel or indulge in black marketing of cooking gas cylinders. Booking of gas cylinders on phone has certainly been a welcome step and has reduced retail consumer uncertainty on when their supply will be replenished. But there are still areas where service falls woefully short, including the crucial one of safety. If your gas cylinder  or stove develops a leakage after 6 PM, rest assured that you will receive no response till 9 AM the next morning from your gas agency, presuming that the next day is not the weekly off day for your agency. The three distribution companies have provided contact numbers. The problem is that, when you call those numbers, all you get is a polite message informing you that your complaint will be attended to. Even the agency responds in a leisurely manner, three to four hours after they are informed.

The two sectors that meet basic requirements of the citizen, health and education, are prime examples of how state monopoly has impeded the process of economic development and, more importantly, meeting customer needs. The public health system is the only avenue for a large section of the population which cannot afford private health care. Apart from a few islands of excellence, the public healthcare system falls miserably short of the expected standards of effective, good quality service provision. Especially in remote tribal areas (but also elsewhere), doctors just do not turn up for duty; when they do, attention to patients is often perfunctory, if not dismissive. Diagnostic equipment, like x-ray and scan machines, are, when provided, often out of order, generally because of outmoded bureaucratic procedures that prevent timely supply of spares. I speak from personal experience: antenatal care in primary health centres is generally routinely and superficially carried out, with no clear focus on mothers who face high risks at delivery time. Post-delivery, neonatal follow up is extremely poor, with the result that a large proportion of child deaths occur in the first year of birth (of that, a large proportion occurs in the first four weeks after birth). The public health machinery also takes no responsibility for severely malnourished children, disregarding the dictum that prevention is better than cure.

Education is an even more unfortunate example of the malevolent effects of state monopoly. Oligarchies have taken root in this system – the state education bureaucracy and the teachers’ unions. State schools are tightly controlled by the bureaucracy, which decides every aspect from school location and curricula to teacher remuneration and career progression. Unions have resisted efforts to enforce accountability, leading to  the phenomena of absent teachers, poor quality instruction, high dropout rates and unemployable students with limited language and arithmetic skills. Growth of private schools is stifled by the system of recognition by the education department, with its inbuilt tendencies towards patronage and corruption. Higher education also suffers from the stultifying effects of bureaucratisation. Low quality, private education empires, run by those with political muscle, have become the norm, rather than the exception. Even more unfortunate has been the tendency of the state, more so in recent years, to encroach on the autonomy of once reputed public institutions of higher learning by stacking their managements with pliable, political appointees and, increasingly, seeking to dictate the content and pedagogy to be followed by these institutions.

Public service can be efficient and effective only if it adheres to the three basic principles of integrity, professionalism and empathy. Integrity implies both financial probity and a commitment to the outcomes that are sought from the provision of the service. Professionalism requires a clear understanding by those in the system of their tasks and a willingness to discharge their duties honestly and to the best of their abilities. Above all, public service requires the very human quality of empathy, of placing oneself in the shoes of one’s’ less privileged brothers and sisters and understanding what difference the access to high quality public service can make to their lives: as a government functionary, one needs to look behind the file/statistic and visualise the face of the person you are dealing with. Since these attributes are becoming increasingly difficult to inculcate in a bureaucracy that is influenced by the prevailing social values of consumerism and self-centredness, what is required is the introduction of competition (to the extent that it is possible) in every sector of economic and social activity.

Competition has certainly helped in the telecommunications and automobile sectors. The public sector behemoths, BSNL and MTNL, have lost a lot of ground to private telecom operators but their loss has been the consumers’ gain, leading to an explosive growth in mobile communications. Gone are the days when one waited for days for a telephone connection. Nor does one wait patiently month after month for the supply of an Ambassador or Fiat (Premier Padmini) car, or, later on, a Maruti 800 car. Hyundai, Honda, Ford and Toyota cars are available today virtually off the shelf. Of course, there are sectors like utilities (energy and transport) and public goods (education and health), where, because of heavy, long gestation investments, the nature of technology or the impact on human capabilities, some regulations on entry and on quality/price will have to be implemented.

Competition in sectors like health and education can be introduced by providing options, in addition to state-provided ones, to the consumer. These could take the forms of private health care and education provision, as in the case of charter schools in the USA. Unviable or poorly functioning state institutions could also be entrusted to private management, with accountability for performance and sound management. The fundamental aim should be to ensure that public sector providers compete with private parties for funding for providing services of a specified quality (with designated outcomes) at reasonable prices. Provision of cash vouchers for spending on health and education would provide the consumer with the choice of that provider who best meets her expectations. Of course, this will require a high quality of regulation, with the regulators ensuring a level playing field for both parties and monitoring performance and cost of services to the consumer. In the infrastructure and utility sectors, the same principle of competition will have to be applied, with existing public sector providers having to compete for customers with private participants. An auction route is the best method of attracting the best offers, whether from the public or private sectors.

The state has two major responsibilities in such a competitive set up. Firstly, it has to set up autonomous regulatory systems in different sectors that discharge their duties in a fair, impartial manner and ensure the provision of reliable, reasonably priced goods and services to consumers. Secondly, the state also has to work towards providing an environment to public sector providers which gives them the freedom and flexibility to compete in the marketplace, with the clear understanding that there is no guarantee of their survival if they do not perform. It would be in the best interests of all for the state to abide by the maxim “The business of government is not business.”






JAM for the Indian

The rule is, jam tomorrow and jam yesterday – but never jam today

(Lewis Carroll: Through the Looking Glass and What Alice Found There)


Alice was faced with a peculiar dilemma when offered jam by the White Queen; she could never have it today, but only tomorrow or yesterday. You guessed her problem: when tomorrow came, it would be today, so, as per the White Queen’s edict, she could never have her jam “today” or any other day, for that matter. The aam aurat/aadmi in India are in danger of being caught in a similar trap involving JAM, unless a lot of thought is given to how to operationalise JAM, popularise it, enable it to gain wide acceptance and surmount the innumerable obstacles posed by those who are better off (and don’t need JAM) but nevertheless are haunted by imaginary fears. I refer, of course, to the path breaking initiative of the Government of India to marry technology and finance to improve the living standards of millions of Indians. JAM has three components — the Jan Dhan Yojana (J), aimed at financial inclusion for the population as a whole, Aadhar (A), the issue of biometric identification cards to all Indians and the Mobile (M), the instrument that can be found in the hands of about 700 million Indians today. J, the first corner of this trinity, will reach banking and other financial services to millions who are currently unserved or underserved by existing banking systems. This will obviate the need for often understaffed/unstaffed “brick and mortar” bank branches. The recently licensed payment banks, with their focus on technology, are better placed to service remote populations with the skilful use of mobile technology, M, the second part of the trinity. The triangle is completed by Aadhar, A, the individual unique identification number that ensures that financial services and benefits flow to the person for whom they are earmarked.

The three essential conditions to be fulfilled if JAM is to operate smoothly are: (a) access of every Indian to banking channels where her money can be parked; (b) ease and efficiency of transactions; and (c) secure, accurate identification of the account holder to check diversion of benefits. An inadequate understanding of these requirements in transferring government benefits to intended beneficiaries has bedeviled implementation of schemes involving newly created bank accounts and has provided fodder to those Luddites who see red at the very mention of the word “cash transfers”. For example, the Government of Puducherry rushed through a scheme to overcome supply side constraints in the form of a dysfunctional public distribution system by transferring money directly to individual bank accounts. This ill-conceived measure ran into three issues which hastened its early demise: (a) inconvenient access to banks meant that people had to incur the double cost of visiting banks to draw cash and then going to the ration shop to purchase rice; (b) arbitrary deductions by the bank of apparently outstanding dues denied the beneficiaries access to the full amount of the cash transfer; (c) the money could be used to purchase anything, which meant women, children and the old might not get rice were the amount to be spent by the men of the family on items like alcohol. Hasty moves to pay MNREGA wages through existing inefficient banking channels have also come a cropper.

“Cash transfers” is a term that has been widely misunderstood and, I suspect, often deliberately misinterpreted to serve partisan ideological ends. For a start, we need to be clear about unconditional versus conditional cash transfers. In the former, no specific behaviour is sought from the recipient in exchange for availing of the cash transfer benefit, such as, for example, availing of the services of a public health facility or educational institution or fulfilling specific conditions like registering for antenatal care. This is in contrast to conditional cash transfers where availing of a specific, generally public, service provision entitles the beneficiary to the cash transfer. One problem with conditional cash transfers is the failure to provide satisfactory public services: for instance, if there is no doctor or nurse at a primary health facility, the failure to register for antenatal care would deprive the beneficiary of the cash transfer conditional on antenatal care registration. Going in blindly for unconditional cash transfers in such cases is fraught with its own dangers, like the apprehension in Puducherry that the male household head would spend the cash on liquor, thereby denying his vulnerable family members access to sorely needed nutrition, health or education benefits.

It is here that the government needs to use its imagination in devising a workable, effective solution covering schemes in different sectors. Unconditional and conditional cash transfers should be linked to a mobile wallet created for each beneficiary/consumer. This mobile wallet will be linked to the bank account and Aadhar number of the individual consumer. Cash transfers (whether unconditional or conditional) under different heads — health, food, education — will flow into the individual’s mobile wallet. Choice should be given to the consumer to access the service from a public or private provider, to reduce the inefficiencies of state/private monopolies/oligopolies. Goods/service providers will be paid through the mobile wallet for goods/services delivered, using point of sale machines that identify the customer through Aadhar identification procedures.

There is also the important issue of identifying the eligibility of the beneficiary for specific types of assistance. The government has scrapped the Below Poverty Line (BPL) lists. These suffered from two infirmities: first, the lists often left out the poorest and most marginalised sections of society and secondly, they were not dynamic, in that there was no provision for updation as families exited or newly entered the ranks of the poor. The 2011 Socio Economic and Caste Census (SECC) has attempted to use household data (based on an intensive nationwide survey conducted in rural and urban areas) to identify households which could be defined as suffering from deprivations of different degrees, using income and assets as criteria. While this is better than the old BPL classification, the SECC also has some grey areas which could affect the identification of those households genuinely in need of various social protection programmes. The authenticity of the data gathered during the survey can be open to question. There is also the issue of, over time, including households that, because of various factors, move afresh into the deprived category. Most importantly, there is no basis to ascertain income earnings, especially in case of households that are not covered by the Income Tax Department records and which, as in the case of agricultural households, are not liable to pay income tax. The possibility of families subdividing themselves to avail of benefits cannot be ruled out: one is reminded of the efforts made by sections of the agricultural elite, in the two decades after land reforms were introduced in the 1950s, to show land ownership in the name of servants and even animals to avoid parting with agricultural land.

One possible method of checking misuse of benefits would be to insist on bank accounts being linked to the Permanent Account Number (PAN) cards issued by the Income Tax Department and to the Aadhar identity. Over time, as this writer has often advocated, this should be accompanied by a move to a cashless economy. Currency notes of over Rs. 50 denomination should be withdrawn from circulation and mobile wallets should become the norm for cashless transactions. Moreover, transactions of a monetary value of over, say, Rs. 500, should be mandatorily through a cashless system. This would provide, through the income tax network, full details of the receipts and expenditures of every household, automatically thereby excluding from the ambit of government benefits those who are not entitled to them. If there is doubt about the feasibility of a country moving to a largely cashless economy, we need see no further than the example of Sweden. Cash represents just 2% of Sweden’s economy and only 20% of consumer payments are made in cash in Sweden as compared to 75% in the rest of the world (this figure would be well over 90% in India). Nor does the oft-parroted argument about the illiteracy of India’s citizens hold water: one just has to see how Indian men and women have taken to mobile phones to realise that lack of education is no hindrance to the enthusiastic adoption of “liberating technology”.

However, this would be possible only when there is a broad consensus on the applicability of Aadhar for all types of transactions. Sections of the intelligentsia have voiced apprehensions about the misuse of private data of individuals, despite the fact that the Aadhar card has the same information as the identity card issued by the Election Commission of India, except for the additional incorporation of biometric information. These groups have been actively agitating in the country’s highest judicial forum against the widespread adoption of this technology. Forgotten is the harsh fact that for a person deprived of so many economic and social rights, a hypothetical loss of so-called “privacy” is hardly the most important consideration. Forgive the atrocious pun, but without JAM, India’s poor and disadvantaged run the risk of being denied their bread and butter.