On March 11, 2016, the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill, 2016 was passed by the Lok Sabha [LS]. In the following week, the Bill was returned by the Rajya Sabha [RS] with five key amendments, but these were turned down and the LS passed it as a Money Bill.
The Aadhaar Bill plans to use the identification number issued by the Unique Identification Authority of India (UIDAI), to deliver State subsidies directly into the hands (or actually, bank accounts) of beneficiaries. Aadhaar was first mooted as the Indian equivalent to the Social Security Number in the US.
Aadhaar isn’t compulsory yet. The Bill is careful in stating that every resident is ‘entitled’ to an Aadhaar number. But it also specifies that the government may ‘require’ an individual to enrol for Aadhaar to verify his identity for receiving a subsidy or government service. In other words, for him to be eligible for subsidy or services, he must have the Aadhaar number.
The law will revolutionize the way various subsidies are administered and services delivered. To get an idea of what it can do, one only needs to recall a statement made by former prime minister, Rajiv Gandhi over 3 decades back that “out of Rupee 1 allocated under a welfare scheme, only 15 paise [Rupee 0.15] reaches the intended beneficiary.”
Apply this to Rs 200,000 crores spent under Mahatma Gandhi National Rural Employment Guarantee Act [MGNREGA] during 5 years until 2013-14; it follows that only Rs 30,000 crores reached intended beneficiaries. The balance a humongous Rs 170,000 crores would have been appropriated by corrupt politicians and bureaucrats. If, the money was to be deposited in the bank account of recipients duly authenticated with Aadhaar, all of this pilferage could have been prevented.
Under the extant dispensation of routing fertilizer subsidy through urea manufacturers/suppliers, there is an unprecedented leakage of 30% by way of diversion to chemical industries and smuggling to neighbouring countries. This translates to a loss of about Rs 15,000 crores annually to the exchequer. This can be saved if subsidy is deposited in account of farmers.
In extant arrangements for extending food subsidy through public distribution system [PDS] under National Food Security Act [NFSA], the diversion of subsidized food can be as high as 50%. On food subsidy budget of over Rs 100,000 crores, this would translate to loss of about Rs 50,000 crores. A system of direct transfer to beneficiaries Aadhaar seeded accounts can prevent this mammoth loss.
For kerosene subsidy, where the government will be launching a scheme of direct transfer in select districts from April 1, 2016, there exists potential for saving thousands of crores. In LPG [liquefied petroleum gas] where a scheme of direct benefit transfer [DBT] is already in place since January 1, 2015, the government is saving around Rs 15,000 crores annually due to elimination of duplicate/fake accounts. More saving will accrue after the process of seeding all accounts with Aadhaar is completed.
The law will also help in making a dent on black money which is eating in to the fruits of development. For instance, it is common knowledge that a major slice of black money is generated in real estate sector as presently, there is no check on holding property in ‘benami’ [anonymous] names. The requirement to declare Aadhaar number in all property transactions will help curb such practices.
Likewise, a look at permanent account number [PAN] in juxtaposition with Aadhaar number will help income-tax authorities in cross-checking income filed in annual returns and thus figure out undisclosed or suppressed income. A further look at passport number in juxtaposition with PAN and Aadhaar will help in chasing the trail of cross-border transactions in turn, bringing to book black money stashed abroad.
In other areas too, use of Aadhaar number can help in curbing a host of malpractices and attendant socio-economic problems. For instance, millions of driving licenses currently in use are bogus/fake. This is a major reason for tens of thousands of deaths in road accidents every year. With requirement of Aadhaar made compulsory for issue of driving licence, this malady will be completely eliminated.
In view of the unprecedented boost to development and building infrastructure [made possible by saving in resources] and social benefits, Modi was particularly keen to get this law passed at the earliest possible. But, considering that BJP is in minority in RS and past experience with GST and land bill [both these bills were stymied by a belligerent Congress and other opposition parties], the government decided to present this as Money Bill [MB].
For passing a law as MB, the approval of RS is not mandatory. So, even if RS rejects the bill, it is deemed to have been passed once approved by LS. Congress – the main opposition party and holding the key to passage in RS – vehemently opposed decision of LS Speaker to allow the bill to be introduced as MB. It is even contemplating to challenge it in the court.
The finance minister, Arun Jaitely has very aptly explained that since the subject matter involves payments from the Consolidated Fund of India [CFI], treating this as MB is very much in consonance with the provisions of the constitution. Yet, the Congress is engaged in hair splitting and is hell bent on seeking judicial intervention to somehow get the latter declare the law as null and void.
The reactions of grand old party only confirm the government’s apprehension that if it had not introduced the bill as MB, then the former would have obstructed its passage [as it did for GST & land bill] thereby denying the country the benefits to economy and people. In this backdrop, latter’s tactics to bypass RS in the overall interest of the nation should be welcome.
It is hoped that the law on Aadhaar will be allowed to have a smooth run without any encumbrances thereby helping Modi to fulfill his promises to the people of India.