This could be the Congress governments redemption for all the wrong that it did
In what could be the single most important reform after the reforms of 1991,
the government of India announced that it will roll out the direct cash
transfer scheme in all districts in India in 2013.
Ideally, when the government announces something like this, it hardly
provokes excitement because in all probability the government is going to fail
to implement it. This case, however, is different. If the government is indeed able to implement the scheme through the whole
of India it will do a great deal to plug corruption in the entire country.
Imagine this, of all the billions of dollars that the government spends on
subsidies only 2% reaches the intended beneficiary. If not all, but most such
leakages will be plugged with the introduction of the direct cash transfer. No
more long lines in front of the ration shops, people can buy rice and wheat
straight from the nearby grocer and expect to be compensated by cash in their
But will the government be successful in implementing it. The answer is, yes!
Because, the Congress lead government now has its back against the wall. At
this point of time, there is no chance that the present government wins a third
term, a rare achievement for any government in India. Unless however, the
government is able to give an incentive to the people and nothing is better
than cash. This will have two major impacts on the situation in the country.
One, you will have a huge amount of food inflation. The cost of products
like milk and eggs will increase substantially in almost all states. Analysis
published previously indicates how people at the bottom of the pyramid spend
their first few hundred rupees. There will be a big demand for soaps,
toothpastes, shampoos and beauty creams and that will impact the bottom lines
of FMCG companies. Two, there will be significant labor shortage across the metropolitan cities
in India. This population would migrate to the city and perform odd jobs for
just a few bucks because of an absolute non-availability of jobs in the
villages. They will now be tempted to return back to the villages and this was
already witnessed after the implementation of MNREGA.
In spite of all the misdoings of the Congress government, it has to be
applauded if it is able to pull this one through.