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Digitisation, a trump card, winning more hands for government

Benefits of digitisation have started showing on the Indian economy. Aadhaar has clearly emerged as the government’s trump card in winning crucial hands.

September 06, 2017 / 09:22 PM IST

Benefits of digitisation have started showing on the Indian economy. Aadhaar has clearly emerged as the government’s trump card in winning crucial hands --  the linking of the 12-digit unique number to ensure direct benefit transfers has proved to be a major victory.

Reports say that the new systems for monitoring transactions at fair price shops (FPS) are helping slash government’s food subsidy bill. A quarter of the ration card holders in Haryana have not turned up for collecting the provisions since June when all 9,500 FPS in the state started using electronic point of sale (ePoS) machines. Haryana is among the six states that have implemented Aadhaar-seeding of ration cards. Aadhaar has avoided duplication and reduced the number of bogus claims.

Rajasthan had also reported 20 percent weeding of dummy accounts from its list of beneficiaries. Both the states have acknowledged the implementation of ePOS in plugging the leaks.

In a report on three years of Narendra Modi government, industry body ASSOCHAM had noted that the biometric cards have resulting in Rs 83,184 crore reaching beneficiaries of the Direct Benefit Transfer (DBT) schemes, without the notorious leakages of the past.

Direct Benefit Transfer (DBT) schemes have further cut out 3.34 crore duplicate consumers under PaHAL (use of Aadhaar for claiming LPG subsidy) and a further 2.33 crore ration cards.


According to government’s DBT website, cumulative transfers have touched Rs 221,651.95 crore out of which Rs 38,827 crore has been done in the current fiscal. A total number of transactions in the current fiscal has touched 67.87 crore which involves 345 schemes.

Encouraged by its response the government has decided to increase the number of government schemes to 3,500. A total outlay of Rs 6 lakh crore is expected to be brought in through these schemes which cover 3,000 state schemes and 500 central government schemes.

Savings up to 2016-17 because of DBT is reported to be Rs 57,029 crore. The biggest saving of Rs 29,769 crore is on account of PAHAL, followed by the public distribution scheme which helped save Rs 14,000 crore. Rural development, which includes a saving of Rs 11,741 crore on account of MNERGA, made up for most of the DBT saving.

These initial numbers from the government highlight the potential of savings if it is implemented on all the schemes. Naturally, vested interest is not keen on speedy implementation of this scheme which plugs the leaks in the system. Many states are still in the process of clearing the path for implementation of schemes and recommending schemes to DBT.

The big numbers will be visible after the DBT in fertilisers and food distribution is implemented in all states. Nationwide DBT rollout for fertiliser and food is getting delayed on account of shortage of ePoS machines. The scheme, which was supposed to be launched in early 2017, has now been delayed till April 2018. Centre’s food subsidy is expected to touch Rs 2 lakh crore by 2020 from the current levels of Rs 1.45 lakh crore while fertiliser subsidy is budgeted for Rs 70,000 crore in the current year.

While GST and demonetisation are helping the government increase its tax net and in legitimizing the economy, digitization is helping it control its cost by plugging leakages. If analysts would look at India as a company the current scenario suggests higher revenue growth but more importantly a higher profit growth. Most would come up with a buy recommendation on such a company.
first published: Sep 6, 2017 06:43 pm

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