India aims for cash transfers in welfare overhaul

NEW DELHI (AFP) - India's prime minister gave the greenlight Friday for a radical overhaul of the country's US$61 billion (S$75 billion) welfare system that would see the government make cash payments direct to the needy. After several trials of cash transfers in different areas of India, Premier Manmohan Singh approved the idea of implementing the policy nation-wide that would change the way hundreds of millions of poor access entitlement programmes.

"This is to be done in a fast-track, accelerated mode to be achieved in a time-bound manner," a statement from the prime minister's office said. "The idea is to move to a completely electronic cash-transfer system for the entire population."

Welfare schemes such as scholarships for education, old-age pensions or unemployment benefits have been identified as the first to be switched over to the new system, an official in the PM's office told reporters. Scholarship fees, for example, are currently paid by the government to a university and are then accessed by the student.

The main advantages in paying cash directly are that corruption can be reduced by removing government middlemen who often demand bribes to dispense subsidised products or services, while the poor can be better targeted, the official said.