Government finally moves to replace subsidies with direct cash transfers

Riding on the back of the national unique identification (UID) or 'Aadhar' project, the union government has set up a task force to find ways of providing subsidies on kerosene, cooking gas and fertiliser to targeted beneficiaries through direct cash transfers. The UID is expected kick-start the scheme, although on a pilot basis, before the end of the current calendar year.

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

For the current year, according to budget documents, the government's subsidy bill on petroleum and fertiliser add up to Rs53,000 crore.

The task force will also design appropriate information technology-based 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 on Monday.

Nilekani has said that it is 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.