Of Direct Cash Transfer and State Capacity

In response to the announcement of the introduction of cash transfer, Narender Pani has argued, in The Hindu, that the political imperatives of Congress Party have trumped legitimate worries over transaction costs of Aadhar enabled cash transfer.

Pratap Bhanu Mehta had earlier expressed his anxiety over the framing of the shift to cash transfer and the perils of looking for technocratic solutions as easy substitute for the hard grind of bureaucratic reforms and enhancing state capacity.      

Cash Transfer: A Game-changer for the Poor?

The Congress-led United Progressive Alliance (UPA) Government announced yesterday that 29 existing welfare schemes of the Union Government would be replaced by direct cash transfers in 51 districts across the country from January 1, 2013. Indicative of the political ramifications, these proposals were announced jointly by Mr. Jairam Ramesh, the Minister for Rural Development and Mr. P. Chidambaram, the Minister for Finance at the headquarters of the Congress Party.    

Mr. Chidambaram announced that cash transfers would initially be introduced in 51 districts from January 1 and that the Government hopes to complete the nation-wide transition to cash transfer by the end of the next year. The Finance Minister also clarified that introduction of cash transfer in lieu of public distribution services can commence only after further consultation and studies. It is significant in this context that the Minister of State (IC) for Consumer Affairs, Food & Public Distribution Prof. K.V.Thomas announced in the Lok Sabha yesterday that that Ministry proposes to introduce a pilot scheme of cash subsidy under the Targeted Public Distribution System in six Union Territories as a pilot project.

Jairam Ramesh hailed the introduction of cash transfer as a fulfillment of a promise made by UPA in its election manifesto in 2009. He termed the scheme, “Aap Ka Paisa Aap Ke Haath” thus evoking memories of the party’s election slogan of 2004. Similarly, Mr. Chidambaram also called the scheme a game-changer.

The mainstream media has, as illustrated in this editorial of The Economic Times, welcomed the measure as a tool for eliminating the losses arising out of leakage, pilferage and inefficiency in the administration of public welfare schemes.  At the same time, questions still hover around the scheme, its legality, its impact on employment and its exclusionary potential.

Legality of Aadhar-enabled cash transfer

The introduction of cash transfer is predicated around Aadhar cards. However, as several scholars and critics have pointed out, UID Project has not obtained any form of statutory recognition. As Sudhir Krishanswamy had noted at the time of commencement of the UID project, “UIDAI is an executive authority created by Executive Orders which functions as an independent agency under the auspices of the Planning Commission of India. It is noteworthy that the Planning Commission is itself constituted by a Cabinet Resolution and does not have a constitutional or statutory status.” This ambiguity about UIDAI’s legal status has not been resolved as yet and the Unique Identification Authority of India Bill is still pending before the Parliament.

Moreover, it is not clear whether the proposed introduction of cash transfer under the TPDS would be in compliance with the rigorous obligations spelled out by the Supreme Court of India in the Right to Food case [People’s Union for Civil Liberties v Union of India (Writ Petition [Civil] No. 196 of 2001].

Inadequate coverage under Aadhar and delays in cash transfer

Further, an excessive haste in introduction of cash transfer through Aadhar Card may end up excluding a vast swath of people, covered under the existing welfare scheme, but not yet registered under Aadhar. This apprehension is far too real to ignore since, by Government’s own admission, registration of persons under Aadhar have not been completed as yet. Strangely, the Finance Minister himself stated that the scheme would be initiated in the selected districts once 80 % coverage under Aadhar is achieved. It reflects poorly on the commitment of the Government to inclusive growth when a senior minister does not find anything amiss in conscious exclusion of 20% of beneficiaries from a welfare scheme at the point of its initiation.

It must also be noted that a pilot project on substitution of subsidised kerosense with cash transfer in Beelaheri, Rajasthan has been plagued by several teething problems of exclusion of beneficiaries, duplication and delay in cash-transfer. While such teething troubles are inevitable, they certainly make a case for some circumspection, patience and better groundwork on part of the Government before introducing cash benefits through Aadhar. 

Withdrawal of public services, supply-side contraction and impact on employment

One of the most serious dangers that the transition to direct cash transfer may bring along is the contraction of the gargantuan procurement, storage and distribution chains that have been built around welfare schemes. In large part of rural India, government welfare schemes are the only channel of supply of essential services. Replacing these services with cash transfer is unlikely to work unless accompanied by development of affordable substitute market-based supply chains. In absence of such well-developed market, beneficiaries of cash transfers may become hostage to predatory pricing practices.

Apart from the effects on supply of essential services, R. Jagannathan, in First Post, argues that the livelihood of more than 10 million persons who are currently employed in a vast range of government welfare schemes may be imperilled as result of their substitution with direct cash transfer.

There has also been a conspicuous lack of clarity on the nature of banking channels and safeguards that would be employed for cash transfer. In light of the limited reach of formal banking channels and the potential of abuse inherent in informal networks like banking correspondents, the Union Government owes to the people to come clean on this point.
   
Thus, many observers are anxious about the impact of introduction of cash transfer in India. To the credit of the Union Government, it has kept the more complex schemes likes TPDS outside the purview of cash transfer at this moment. Yet, even the limited experiment proposed for the 51 identified districts would end up disenfranchising the 'aam aadmi' unless the concerns over the ambiguous legal status and limited coverage are addressed.   

Further efforts of the Tamil Nadu Government to create housing for the urban poor

The Tamil Nadu Slum-Clearance Board is making strong progress in the creation of new tenements for slum dwellers in Chennai, with 14,000 such tenements scheduled to come up for allotment in March 2013 according to this recent news report . The effort now is to ensure that these tenements are possessed of all basic amenities such as electricity, water, sanitation, as well as commensurate transport facilities, ration shops, primary health centres, anganwadis, and schools.

This follows on from a problem faced by persons availing of similar accommodation constructed under the aegis of the previous DMK government, wherein a lack of basic infrastructural facilities such as adequate water supply and sanitation was noted, as reported here.

The role of slum-clearance boards is something that is deserving of closer scrutiny, and is also a fit case for comparative analysis, both quantitative as well as qualitative, of different States' performance. In the specific case of Tamil Nadu, this piece in the Economic and Political Weekly throws interesting light on the influence of political and other considerations, specifically the intervention of the World Bank, in the formation of policy for the Slum-Clearance Board.

One qualitative analysis of slum-resettlements carried out on the Yamuna bank in Delhi may be found in this piece, again in the Economic and Political Weekly. Clearly, some States and Governments have better records than others in dealing with this crucially important facet of Governance. Understanding the causalities and mechanisms that lead to such differing results is something that seems to beg a closer enquiry, and that is something we will hopefully be able to provide on this blog.

Access to Justice is Crucial for Tackling Poverty: Says the UN Special Rapporteur on Extreme Poverty and Human Rights

The United Nations Special Rapporteur on Extreme Poverty and Human Rights, Ms. Magdalena Sepulveda Carmona, has called for greater respect for the human right to access to justice for the poor. In her Annual Report, submitted to the General Assembly, she noted that “[A]ccess to justice is crucial for tackling the root causes of poverty, exclusion and vulnerability” and that “Persons living in poverty have a right to access justice without discrimination of any kind, and a right to due process, understood as the right to be treated fairly, efficiently and effectively throughout the justice chain.”

Indeed she noted that “[S]tates have assumed obligations in that regard, by committing themselves to respect, protect and fulfil several rights such as the right to an effective remedy.” She referred to Article 8 of the Universal Declaration of Human Rights, Article 2.3 of the International Covenant on Civil and Political Rights, Article 6 of the Convention on the Elimination of All Forms of Racial Discrimination among a host of international treaty-provisions. She also clarified that access to justice “entails more than improving access to judicial and adjudicatory mechanisms. It also implies that remedies must be effective and legal, and that judicial outcomes must be just and equitable.”

The Report elaborates on this and posits that:

“States must also take positive measures to ensure laws and policies are substantively non-discriminatory, including measures to eliminate conditions which cause or help to perpetuate discrimination…To ensure that the poor have de facto enjoyment of the rights to an effective remedy, equality before the courts and a fair trial, States must take effective measures to remove any regulatory, social or economic obstacles that impede or hamper persons living in poverty from accessing remedies and securing a fair and equitable outcome in any judicial or adjudicatory process. This includes removing obstacles imposed by the unequal economic or social status of those seeking redress, taking into account the principles of equality before the courts and equality of arms, which are integral parts of due process.”

Judicial Review of Policies

One of the most critical aspects of this Report is the Special Rapporteur’s view on judicial review of administrative decisions and social policies that impinge on basic rights of persons living in poverty.

The Report states

“The lack of remedies for the negative impacts of social policy in the areas of health, housing, education and social security, or for administrative decisions relating to welfare benefits or asylum proceedings, often results in inability to seek redress in cases of violations of key human rights, such as the right to equality and non-discrimination and the right to social security… The lack of judicial review or complaints mechanisms for social policy, compounded by a lack of justiciability of economic, social and cultural rights at the domestic level, creates the perception that social policy is a charitable measure rather than part of an obligation to ensure the enjoyment of human rights.”  

Legal Identity and Access to Justice

The Report also draws attention to the lack of legal identity as a major disability for persons living in poverty. The Report acknowledges that “the right to be recognized as a person before the law is a fundamental human right (International Covenant on Civil and Political Rights, art. 16, and Convention on the Rights of the Child, art. 7), and is at the core of the right to access justice. Many persons living in poverty are de facto deprived of accessing courts and other public services as they lack legal identity…Without recognition, individuals are unable to access social services or to access courts to seek remedies for violations of their human rights.”

This reiterates the recommendations of the UN Commission on Legal Empowerment that had opined that the lack of formal legal identity is an important barrier against access to justice for poor.

The Report also referred to the adoption of Guiding Principles on Extreme Poverty and Human Rights by the UN Human Rights Council through Resolution 21/11 earlier on September 27. The Guiding Principles and the Human Rights Council Resolution is available here.