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Govt plan: fuel,farm subsidy as direct cash transfers

FIRST PILOT this YEAR : Nilekani to head taskforce; in step with UID.

The government plans to provide kerosene,cooking gas and fertiliser subsidy to the poor by direct cash transfers on a pilot basis before the end of the current calendar year,2011.

For the current year,according to Budget documents,petroleum and fertiliser subsidies add up to Rs 53,000 crore.

The Finance Ministry today set up a task force under Nandan Nilekani,chairman of the Unique Identification Authority of India,to evolve a method for handing out such subsidies straight to individuals,families and farmers.

The direct transfers will also be aligned with the unique identification number that the UIDAI has started issuing. It will submit an interim report within the next four months.

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This task force will also design appropriate IT systems and align these with the issuance of UID numbers,and bring about changes in the “administration and supply chain management,” the Ministry said in a statement.

When contacted,Nilekani told The Indian Express that it was not very difficult to develop such technology solutions.

“Today,we can create a sophisticated technology platform. We have the capacity to get such people and we plan to get them in the next few months,” Nilekani said.


Realising that it may fall into a bureaucratic trap,Finance Minister Pranab Mukherjee has included Secretaries from the Departments of Expenditure,Financial Services,Chemicals and Fertilizers,Agriculture,Food and Public Distribution,Petroleum and Natural Gas and Rural Development in the task force.

The departments concerned have been tasked with implementing the new system on a pilot basis within six months of the submission of the report.

The pilot implementation would be supervised by the task force. “The final report will be submitted thereafter and this would include the results of the implementation of the solution on the field,” the Ministry’s statement said.


At present,the government provides kerosene at subsidised prices to BPL families under the public distribution system and there is overwhelming evidence that this policy is resulting in waste,leakage,adulteration and inefficiency.

A recent study by NCAER said that almost a third of the total subsidised kerosene was diverted,resulting in a huge black market for the fuel.

Similarly,the system of provision and delivery of subsidized LPG to intended beneficiaries needs to be reformed. Fertilizer subsidy,as it exists today,is available to all farmers. It is not possible to differentiate the segments for which the subsidy should be given in this sector. “There is a need to evolve a suitable mechanism for direct subsidies to individuals who are entitled to them,” the ministry said.

First published on: 15-02-2011 at 05:05:29 am
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