Direct Cash Transfer Scheme: Will it remove middleman Corruption or just a Political Gimmick?

Poverty and corruption are two things that are stalling our nation’s development. So to say, these two

Direct cash transfer scheme- Will it remove middleman corruption or just a political gimmick -

Direct cash transfer scheme- Will it remove middleman corruption or just a political gimmick –

elements are interlinked. And the poor section of the national population is being the worst hit, always. There is one more factor that actually melts the funds that come to the poor people, the factor of middlemen. To tackle this problem, and to ensure the poor get the complete funds allotted to them, a step has been taken by introducing the direct cash transfer scheme.

What is Direct Cash Transfer Scheme?

This scheme is described as a step to poverty reduction and to tackle the ever growing chunk of the people below the poverty line. Under this scheme, various government subsidies and other benefits are given to the poor in the form of cash, that is, the amount is directly transferred into their bank accounts, thereby eliminating the middlemen.

What are the Benefits of Direct Cash Transfer Scheme?

–       One benefit of this scheme is that it becomes easier for the government to fund the specific beneficiaries. There will be lot of clarity in the transactions and the government can ensure that the beneficiaries get the whole money directly. This will eliminate the situation where the poor loose large chunks of their money to the middlemen. The government had also stated that because of this scheme, there will be an adverse impact on the increasing hunger and malnutrition.


–       The direct transfer scheme will also reduce the rising levels of corruption and speed up transfers to the eligible individuals. In a single go, crores of people will be brought within the banking system and country’s mainstream economy.


–       There are many problems related to BPL (Below Poverty Line) list; one of them being a large number of poor families and households not being included in the list. The direct cash transfer scheme would provide food security to all those people who are left out.


–       Income inequality amongst the BPL people will be reduced.


–       One more advantage, and probably one of the most important is that the socio-economic status of the women is enhanced. This will also help in increasing female labour force participation.

The implementation process of the scheme:

The amount of money is directly transferred into the bank accounts of the specific beneficiaries. Many subsidies related to services and household items amounts, scholarship funds etc. will be directly transferred into the people’s bank accounts. This makes the entire process easy and simple.

The demerits of  the Direct Cash Transfer Scheme:

–       Though the direct cash transfer scheme looks very much helpful and supportive to the poor, it has got some limitations too. If we look into the facts, nearly 250 million of our country’s population is below the poverty line. So, because of the scheme, each BPL household will be getting a minimum of 5,000 rupees a year. But there do exist limitations.


–       In the first place, only people with Aadhar cards come under this scheme. Aadhar card is a multi-purpose card that is imperative for every individual in this country. But according to the reports, only around 21 crore people of our total population have the Aadhar card. Secondly, most of the people below the poverty line don’t have bank accounts, and most villages don’t have any bank branches. Hence, it becomes cumbersome for the villagers to get their funds under this scheme, even if they have bank accounts.


–       Moreover, there are also questions raised if this whole direct cash transfer thing is just a political gimmick and nothing else. A world bank study stated that there is a definite link between the direct cash transfer scheme and the voting behaviour. The people are most likely to vote for that political party which expands the elements of this scheme to more and more villages and poverty stricken areas.


–       The food safety and subsidy schemes do not fall under the direct cash transfer scheme. Which means, when it comes to allotment of funds for food and other subsidies, there might be delay in the funds reaching the villages.


–       Since people get subsidies because of this scheme, they might be tempted to use the money, or rather, waste their money in wrong activities like alcohol and gambling.


–       The cash transfer scheme doesn’t improve welfare. Because the families are not persuaded to allocate money for beneficial uses, unlike schemes that direct them to spend on particular items.


Is it a Political gimmick: lets Analyze?

Is this scheme a mere political gimmick? If we keep in mind the Aadhar card factor and the no. of villages having banks, then this scheme will take lot of time to reach the BPL part of our nation. So instead of initiating the scheme first, why not wait till Aadhar cards are issued to all and all the villages have bank branches? Why is our government in a hurry? Is it just to save its face from the recent controversies?

The consuming class or the middle class does not come under this scheme of direct cash transfer. Research in a few developed states in India shows that this consuming class showed the most interest and support India Against Corruption movement. Whereas, most of the people below the poverty line haven’t shown any kind of behaviour towards IAC. A few things become pretty clear here. Is it because of the non-reaction of the BPL people towards corruption, that the government has targeted this direct cash transfer scheme only towards the BPL people, and not towards everybody?

If we turn back the pages of the post-independent history of congress, we can largely see doles, handouts and freebies to win the elections. Is the direct cash transfer scheme also one of them? Or is it really a move by the congress government that has nothing to do with the lust for power?

All such political parties, including Congress, are trying to retain the rural areas by introducing such schemes. They are bent to introduce such pork-barrel schemes like direct cash transfer, in order to keep the poor to remain poor.  Seeing all these facts, more weight can be put on the side that the direct cash transfer scheme is more of a political gimmick, which is played in order to ensure that the poor stay in their place, without developing at all. But can we completely rely on the present facts; or rather wait to see how this scheme is going to work out?

Only time will tell.

  • gh79

    The govt should use this money to create a few new cities. It is proven that peoples standard of living improves when they move to cities but our current cities are overcrowded. So instead of bribing people to stay in villages with NREGA and Cash transfer build new cities so people can improve their lives

  • yssubramanyam

    it is not possible in india. the government //bank infrastructure can meet the requirement of 10% population. 90% of people don’t hold bank accounts, besides 95% people don’t know the correspondence through mobile. the government failed to issue voters ID card as well issue of adhar card. every function is a failure system. government can not manage natural calamities crisis, how can they implement the above scheme. the poor mans voice can not reach to top. it is merely a stunt. price control will help the whole nation. it is just like appointing thieves to trap the thieves. finally both will have mutual understanding and dupe the beneficiary. the nation will further ruin with corruption.