Cash, with strings

Why India should hand out cash, rather than fuel and food, to the needy (The Economist)

As other countries have discovered, handing out cash is more efficient and less susceptible to corruption than handing out food or subsidising fuel. But as long as many of India’s 1.2 billion people lacked proper identification, let alone bank accounts, cash transfers were impracticable.

Now technology offers a powerful solution. A huge project is getting millions of Indians biometrically identified and opening accounts for them. Nandan Nilekani, an IT billionaire who is the brains behind it, expects that by the end of 2014 600m Indians will be enrolled, creating the infrastructure for a system of cash welfare.

The Economist has been consistent in its support of UID and welfare reform in India.

UPDATE: More from The Economist
Money where your mouth is: A debate is growing about how to get welfare to the needy

UID isn’t painless but neither is the status quo

India risks backlash hurrying through Aadhaar project

The pilot project in Beelaheri, a village of 2,000 people some 130 km (81 miles) southwest of Delhi, replaces kerosene subsidies with cash rebates and has been running since December. It has massively lowered demand for the subsidized fuel, which weighs on government finances.

But teething problems are immediately visible.

The headline’s a bit harsh but the piece is well worth reading in its entirety.

UID & Corruption in India

Nilekani slams Kejriwal, says passing a law can’t solve the corruption problem (IBN Live)

Speaking to CNN-IBN Deputy Editor Sagarika Ghose, Nilekani said, “I m as much for fighting corruption as the next guy. But, I certainly don’t believe that by passing a law or putting more penalties on bureaucrats or creating more inspectors is going to solve the corruption problem. That’s absolutely the wrong prescription. Fixing delivery system is more important. Fight corruption by having a bunch of OB vans is not going to solve the problem.”

There’s a short video at the link. Sorry, I couldn’t embed it. I tried. I failed.

In a separate matter — i.e. the minister in the next article isn’t the person Nilekani “slams” above…

India minister denies theft rampant in $14-B food program (Business Mirror – Philippines)

India’s system of distributing food to the poor isn’t corrupt, according to Food Minister K.V. Thomas, who rejected findings by the World Bank, Supreme Court and news investigations that rampant theft is depriving as many as 160 million families of nourishment.

About 5 percent to 10 percent of the food meant for the poor is lost, and that is due to mismanagement, Thomas said in an interview at his office in New Delhi.

The World Bank pegged the figure at 58 percent, in a 2011 report based on government data, and blamed it on graft and wastage. A Supreme Court fact-finding commission declared in the past year that the distribution system in major states had failed in its mission.

UID Benefits: Better compliance, Reduced leakage, Increased efficiency and accountability

Move to plug loopholes in India’s welfare schemes (Gulf News)

New Delhi: Prime Minister Manmohan Singh and Congress party president Sonia Gandhi will launch the nationwide Aadhaar Enabled Service Delivery on October 20 to plug loopholes in implementation of welfare schemes.

The applications will be launched from Dudu in Rajasthan, marking the second anniversary of the Unique Identification Authority of India (UIDAI).

“This will lay the foundation for cash transfers… The prime minister has already launched an architecture for the purpose,” Nandan Nilekani, chairman of UIDAI, which gives the Aadhar numbers, told reporters Friday.

India: Biometric machine for a better welfare system

This ‘speaking’ machine can curb misuse of ration (The Hindu)

Unlike smart cards, which can be pledged or could be handed over to another to get the benefits, biometric system prevents the misuse of ration card. Also, only genuine below poverty line card holder approaches the PDS shop as the well-to-do persons, who hitherto used to send their representatives/ agents to buy the products, hesitate to personally visit the shop, Mr. Gowda said.

This machine can help overcome the economic disadvantages of illiteracy collect better data on food disbursements, reduce the black market in welfare benefits, and can reduce the welfare benefits that accrue to those who do not qualify for particular programs.

But it’s not just the machine. There seems to be a system behind the hardware that can monitor the whole program in near real time.

Pretty cool deployment. I hope it works out.

This one reminds me of a system we developed to monitor teacher time-and-attendance for an aid project in West Africa.

India: West Bengal state adopts biometric ID for jobs program

Indian State Spends USD 18.5 mil on ICT in Welfare Scheme (Future Gov) 
ICT = Information and communications technology

On the 7th of September, the West Bengal state government in India confirmed a Rs. 103-crore (US$18.5 million) contract for end-to-end ICT services to streamline the e-governance applications of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in West Bengal.

MGNREGS, the central government’s flagship social welfare programme, guarantees a minimum of 100 days of employment every year to adult members of rural households who are willing to perform public-service manual labour at minimum wage.

Increasing transparency and efficiency in social programs is important to maintaining their legitimacy amidst allegations of corruption. Biometrics can help and have been deployed successfully to meet identical goals in Andhra Pradesh.

Go-Time for UID in 46 Districts

Delivery test for Unique ID (Yahoo – India)

The rural development ministry and the Unique Identification Authority of India (UIDAI) yesterday decided to use the unique identity (Aadhar) numbers with in-built biometric data for delivery of payments to individual beneficiaries under all ministry schemes.

To start with, the ministry has selected these 46 districts where the Aadhar coverage has been substantial.

“Payment of individual beneficiaries under various schemes is to the tune of Rs 50,000 crore per annum.

500,000,000,000.00 INR = 8,953,599,435.1083 USD
Indian Rupee US Dollar
1 INR = 0.0179072 USD 1 USD = 55.8435 INR

New biometric payment cards for South African social grant recipients offer greater security and convenience

The new system is dramatically reducing SASSA’s operating costs. Until now, it has cost SASSA between R26 ($3.25) and R35 ($4.38) per grant to pay beneficiaries. Under the new agreement, disbursement costs will be capped at R16.50 ($2.07) per payment, enabling the agency to save up to R3bn ($375m) in operating costs over the next five years. This means that the agency will be able to spend its budget allocation more effectively in the future, making a meaningful difference in the lives of more South Africans.
“The early success of the project rollout affirms MasterCard’s vision to create a world beyond cash, as electronic payments using debit MasterCards opens up a world of financial inclusion for many South Africans who have previously not had access to banking products,” says Dries Zietsman, Country Manager, MasterCard South Africa.

“With over 2.5 million cards already issued since rollout in March 2012, it is clear that the cards are already being widely accepted by beneficiaries who are realising the benefits of a cashless environment,” he concludes.

Governor Proposes to Prevent New York City From Using Biometrics To Stem Welfare Fraud

Cuomo Pushing City to End Food-Stamp Fingerprinting (New York Times – h/t @m2sys)

This despite the facts that, according to the commissioner of the city’s Human Resources Administration, the system has saved over $35 million over the last ten years and New York City reaches a higher percentage of the food-stamp-eligible population than does the state as a whole.

Identity management is about people so it’s not surprising that politics enters into government-run identity management systems.

That’s as it should be, but this poll from February found that

53% believe Americans applying for food stamps should be required to be fingerprinted in order to be eligible. More than a third (36%) disagrees, while 11% are undecided.

So in terms of identity management in welfare programs, biometrics work (ROI), they’re popular (unless New Yorkers have extremely different opinions of the subject that the US as a whole, 53% for, 36% against), and the governor wants to force the City to scrap them. Well, that’s politics for you.

Like I said, Identity management is about people. Politics, too.

See also:
New York City: Fingerprints for Auditing Food Stamps
USA: 53% Favor Fingerprinting Requirement For Food Stamp Applicants

Where Eight Out of Every Seven People are on Welfare…

In TN, ration card holders exceed population (Deccan Herald)

The number of persons with ration cards in Tamil Nadu, as enumerated under the Public Distribution System (PDS), far exceeds the state’s population.

However, the secretary to the state government has informed that the bogus ration cards will be eliminated over the next two to three years after biometric smart cards are issued. Pointing out discrepancies in the verification process, the CAG report said in Chennai district alone (barring one zone), 5.97 lakh “suspected bogus family cards” were identified during a door-to-door verification between October 2009 and August 2010 and stop supply was issued subsequently.

Tamil Nadu
Source Wikipedia

As far as Indian states go, Tamil Nadu seems to do pretty well in many socio-economic categories. Bringing more rigor to welfare programs can only help. Biometrics can be a cheap and effective means to that end.