India launches new social welfare system

India has 440 million people living below the poverty line

India launches new social welfare system
Updated: 15:31, Tuesday, 01 January 2013

India will send billions of dollars in social welfare money directly to its poor under a new programme beginning today.

The scheme aims to cut out the middlemen blamed for the massive fraud that plagues the system.

Previously officials often only handed out cash to the poor after taking a cut and were known to enrol fake recipients or register unqualified people.

The country has 440 million people living below the poverty line.

The new programme would see welfare money directly deposited into recipients' bank accounts and require them to prove their identity with biometric data, such as fingerprints or retina scans.

Finance Minister P Chidambaram has described the venture as "nothing less than magical".

However, 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.

Other 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.

India's programme will begin in 20 of the country's 640 districts today, affecting more than 200,000 recipients.

Minister Chidambaram said it will be progressively rolled out in other areas in the coming months.

"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," Mr Chidambaram said.

He appealed for patience with the programme, which he called "a game changer for governance".

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 fertilizer distribution networks, which are blamed for much of the corruption and lost money, would be exempt.

The programme will use 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.

Yesterday, 208 activists and scholars published an open letter expressing concern that the government was forcing the poor to enrol in Aadhar to get welfare benefits without putting safeguards in place to protect their privacy.

They also expressed fears the government planned to eventually replace the food distribution system for the poor, the largest programme of its kind in the world.