Direct Benefits Transfers

Linking Aadhaar to residence for targeted aid

Note4Students

From UPSC perspective, the following things are important :

Prelims level : PM-Kisan

Mains level : Paper 2- Geo-targeted aid during disasters

The article suggests the provision for a safety net with geographic targeting in case of disasters as most disasters are location specific.

Safety net in the U.S.

  • The US Congress enacted in March a Coronavirus Aid, Relief and Economic Security (CARES) Act to sends $1,200 to each individual below the income threshold of $75,000.
  • Nonetheless, as The Washington Post reported, even in October, millions of households were yet to receive their stimulus payments.
  • The tax authorities who were charged with disbursing the funds had no way of knowing how to send the cheques.
  • But the poor had to cross several hurdles to get this money and the computer system did not make it easy for them to register their claim.

Safety net in India and issues with it

  • In contrast to U.S., 23 per cent of Indians living in Delhi-NCR received a payment of Rs 500 in their Jan Dhan accounts within three weeks of the lockdown being declared.
  • Farmers registered for PM-KISAN also received Rs 2,000 in their accounts immediately.
  • However, there were some issues for example, recipients of PM-KISAN were not amongst the poorest households, nor were these the households that were most affected by the COVID-related lockdown.
  • The PM-Kisan Yojana applies to landowners, thereby excluding agricultural labourers as well as the urban informal sector workers who were most affected by the lockdown.
  • Similarly, for the PMJDY payment, BPL and non-BPL households record similar receipt transfers.

Twin challenges in designing social safety nets

  • Unless a registry containing data about individuals and their bank accounts exists, money cannot be transferred expeditiously.
  • 1) Registries based on specific criteria (for example, identified BPL households) may not identify individuals most vulnerable to crises.
  • 2) Factors that contribute towards alleviating poverty may differ from the ones that push people into it — indicating the challenge of targeting welfare beneficiaries in response to shocks.
  • About 40 per cent of the poor in 2012 were pushed into poverty by special circumstances and would not have been classified as being poor based on their 2005 conditions.
  • Such exclusion errors can get magnified in the event of large-scale disasters when using pre-existing databases, since many people are likely to fall into poverty from an economy-wide negative shock, leading to coverage errors.

Way forward

  • Recent estimates from the World Bank suggest that 88 to 115 million people could slide into poverty in 2020.
  • These observations suggest that in a disaster response situation, we cannot rely on registries based on individual characteristics to identify beneficiaries.
  • Most disasters are geographically clustered.
  • If there is a way for us to set up social registries that identify individuals, their place of residence, and their bank accounts, these linkages can be used to transfer funds to everyone living in the affected area quickly.
  • Aadhaar linkages of individuals and bank accounts already exist.
  • If residential information in the Aadhaar database can be efficiently structured, this would allow for geographic targeting.
  • Issue of violation of individual privacy can be addressed by providing that such social registries store only basic information such as location, instead of more sensitive identifiers.

Consider the question “Disasters underscores the importance of social safety nets. However, designing a social safety net that identifies and reach the vulnerable suffers from several challenges. What are these challenes. Suggest ways to address these challenges.” 

Conclusion

As we try to disaster-proof future welfare programmes, these are some of the considerations that deserve attention.

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