India's ruling party wants to send direct payments to nation's poor


New Delhi

India's ruling Congress party presented an idea Tuesday that it hopes will win it the next elections: cash handouts sent directly into the bank accounts of poor people, replacing a corrupt and inefficient web of subsidies and rations that often fail to reach the intended beneficiaries.

"We think this is a game changer," said Finance Minister P. Chidambaram, choosing to unveil the plan alongside another senior cabinet member at Congress party headquarters rather than government offices. "We think people will appreciate what the government has done."

Elections are due by spring 2014, but the party is gearing up in case tensions within the ruling coalition force an early poll. This month, it announced the formation of a committee to coordinate its election strategy, headed by Rahul Gandhi, son of Congress party leader Sonia Gandhi.

Chidambaram and Rural Development Minister Jairam Ramesh pitched the idea squarely as a Congress party program, with a neat poll-ready slogan: "your money, your hand."

"The party is very proud that the government has decided to launch the scheme, and the party congratulates the government for pulling it together," Chidambaram said to chuckles from the assembled reporters.

The idea of cash transfers is founded on an effort to give every Indian a unique identification card and backed by biometric data.

The transfers will roll out Jan. 1 in 51 districts — less than a tenth of the country — and will start by paying out scholarship grants and pensions, leaving much more expensive and more complex systems of subsidies and rations for food and fertilizer untouched for the time being.

India's welfare system is notoriously plagued by corruption and inefficiency, and most of the money intended for the poor is stolen or wasted before it reaches them, studies have shown. Chidambaram said the plan will ultimately eliminate many of the fraudulent and duplicate claimants who receive government benefits, saving the cash-strapped government "considerable" amounts of money.

It will also lead to "incalculable efficiency gains" by transferring money to beneficiaries at the click of a button, he said, instead of channeling it through innumerable layers of government, where much of the cash ended up getting stuck, stolen or unspent.

"If the government says the subsidy is meant for you, it will reach you, and all the people in the middle who eat it up will be removed," Ramesh said.

The left-wing opposition said the plan to replace rations with cash was a "ruse" to gradually cut subsidies as prices rose, while one leading economist wrote that without a greater effort to identify who is poor and deserving of the money, the scheme would only open the door to greater "fiscal profligacy."

Ashok Malik, a political columnist, said the welfare system has expanded under this government into such a "jigsaw puzzle" of competing schemes that any attempt to simplify it and eliminate waste should be welcomed. But he said the new idea is unlikely to save the electoral fortunes of a Congress party widely seen as corrupt and inept.

"It can influence a few votes here and there, but I doubt it can buy a mandate," he said. "With 10 years of anti-incumbency, this is going to be a tough election [for Congress], and I don't see this reversing everything."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + uncapped commission : SThree: Hello! I know most ...

Recruitment Genius: Graduate Web Performance Consultant Trainee

£22000 - £28000 per annum: Recruitment Genius: A Consultant trainee opportunit...

Ashdown Group: Marketing Executive - (Full marketing mix) - Knutsford

£22000 - £25000 per annum + Benefits: Ashdown Group: Marketing Executive - Knu...

Ashdown Group: Web Developer - ASP.NET, C#, MVC - London

£45000 - £55000 per annum + Excellent benefits: Ashdown Group: Web Developer -...

Day In a Page

Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss
Tony Blair joins a strange and exclusive club of political leaders whose careers have been blighted by the Middle East

Blair has joined a strange and exclusive club

A new tomb has just gone up in the Middle East's graveyard of US and British political reputations, says Patrick Cockburn
Election 2015: Meet the top 12 wacky candidates seeking your vote in May

Election 2015

Meet the top 12 wacky candidates seeking your vote in May
Countdown to the election: Operation Save Danny Alexander shifts into high gear as the SNP target his Commons seat

Operation Save Danny Alexander shifts into high gear

The Chief Secretary to the Treasury didn’t forget his Highland roots in the Budget. But the SNP is after his Commons seat
The US economy is under threat because of its neglected infrastructure

The US is getting frayed at the edges

Public spending on infrastructure is only half of Europe’s, and some say the nation’s very prosperity is threatened, says Rupert Cornwell
Mad Men final episodes: Museum exhibition just part of the hoopla greeting end of 1960s-set TV hit

New Yorkers raise a glass to Mad Men

A museum exhibition is just part of the hoopla greeting the final run of the 1960s-set TV hit
Land speed record: British-built hybrid rocket car aims to be the fastest on Earth

British-built hybrid rocket car aims to be the fastest on Earth

Bloodhound SSC will attempt to set a new standard in South Africa's Kalahari desert
Housebuilders go back to basics by using traditional methods and materials

Housebuilders go back to basics - throwing mud at the wall until it sticks

Traditional materials are ticking all the construction boxes: they are cheap, green – and anyone can use them
Daniel Brühl: 'When you have success abroad, you become a traitor. Envy is very German'

Daniel Brühl: 'Envy is very German'

He's got stick for his golden acting career and for his beloved restaurant - but Daniel Brühl is staying put in Berlin (where at least the grannies love him)
How Leica transformed photography for ever: Celebrating 100 years of the famous camera

Celebrating 100 years of Leica

A new book reveals how this elegant, lightweight box of tricks would transform the way we saw life on the street and in fashion, on the battlefield and across the world