Aadhaar panel recommends e-payment for all social safety net schemes

The Final Report of the Task Force on Aaadhar-Enabled Unified Payment Infrastructure has recommended that payments made under the social safety net programs and direct subsidy schemes be done electronically to ensure that the benefits of such schemes reach the intended beneficiaries without any leakages and on time. The Chairman of UIDAI and the Task Force, Nandan Nilekani has recommended a systematic, platform based transformation of governance through the usage of electronic payments. 

The Finance Minister, Pranab Mukherjee, too is of the view that such a system would help bring in transparency in the system and reduce avoidable delays. The Minister has recommended that the pilot projects which are so far mainly implemented in the areas of LPG, kerosene, fertilizers and MGNREGS, be up scaled and implemented in more areas and in more States.

The Task Force chaired by Nandan Nilekani was constituted in September 2011 to recommend, inter alia, detailed solution architecture for direct transfer of subsidy through a payments bridge wherein funds could be transferred into any Aadhaar-enabled bank account on the basis of the Aadhaar number. The Task Force, submitted its report, has observed that beneficiaries of all social safety net programs (MGNREGS, SSP, JSY, IAY, scholarships, etc.) and recipients of direct subsidy transfer payments (LPG, Fertilisers, kerosene, etc.) can greatly benefit by receiving their payments electronically, directly into accounts of their choice at either banks or post offices. It has also recommended that frontline development workers such as school teachers, Anganwadi workers, ASHA workers, etc. who often do not receive their salaries on time, should receive their salaries by direct deposit into their accounts at banks and post offices.

To implement said recommendations, it has proposed that a network of 10,00,000 interoperable micro ATMs operated by Business Correspondents be set-up across the country for people to access their accounts at their own convenience. In order to set-up this network quickly, a last mile transaction fee of 3.14% with a cap of Rs 20 per transaction be paid by Government to banks. This will also help lead to positive network externalities such as reduction in leakages and achieving financial inclusion.

Further, to reduce the use of cash in the economy, the Task Force has recommended that the Government and Government owned institutions accept electronic payments at all locations where they collect payments from citizens, without any additional surcharge. The Task Force also recommends that over a period of time, all payments of Government over the sum of Rs 1,000 should be made or received electronically. Transacting all Government business using electronic payments will help reduce graft, and bring about greater transparency and accountability.

The task force has also suggested that India Post should accept Aadhaar as KYC for post office savings bank accounts and money orders. India Post should look at deployment of micro ATMs in every post office. India Post should join interoperability networks and service customers of other banks, and allow own customers to use ATMs, micro ATMs installed by other banks.