World News

Wednesday 23 July 2014

Benefits-to-bank move targets fraud

Published 02/01/2013|02:50

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Millions in India do not have access to electricity or paved roads, let alone neighbourhood banks

India will pay billions in social security money directly to its poor under a new programme that aims to cut out the middlemen blamed for massive fraud that plagues the system.

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Previously, officials handed out cash to the poor only after taking a cut - if they did not keep all of it for themselves - and were known to enrol fake recipients or register unqualified people.

The latest programme will see benefits deposited directly into recipients' bank accounts and require them to prove their identity with biometric data such as fingerprints or retina scans.

Finance Minister P Chidambaram described the venture as "nothing less than magical", but critics accuse the government of hastily pushing through a complex programme in a country where millions do not have access to electricity or paved roads, let alone neighbourhood banks.

The programme is loosely based on Brazil's widely-praised Bolsa Familia scheme, which has helped lift more than 19 million people out of poverty since 2003.

It will begin in 20 of India's 640 districts, affecting more than 200,000 recipients, and will be rolled out progressively in other areas in the coming months, Mr Chidambaram said. The country has 440 million people living below the poverty line.

"In a huge new experiment like this you should expect some glitches. There may be a problem here and there, but these will be overcome by our people," he said. He appealed for patience with the programme, which he called "a game changer for governance".

The opposition Bharatiya Janata Party has accused the ruling Congress party of using the programme to gain political mileage ahead of elections expected in 2014.

As a first step, the government has said it plans to begin directly transferring money it would spend on programmes such as scholarships and pensions. Eventually the transfers are expected to help fix much of the rest of India's welfare spending, though Mr Chidambaram said the government's massive food, kerosene and fertiliser distribution networks - which are blamed for much of the corruption and lost money - would be exempt.

The scheme will eliminate middlemen and transfer cash directly into bank accounts using data from Aadhar, a government project working to give every Indian identification numbers linked to fingerprints and retina scans. Currently hundreds of millions of Indians have no identity documents.

Press Association

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