Neither the Ministry of Finance nor any government ministry or department has provided any indication of the steps in the flow of funds from the Consolidated Fund of India to the hands of the beneficiaries.

CLAIMS OF TARGETING BENEFICIARIES

In his Budget Speech for 2016-17, Finance Minister Arun Jaitley announced that the government would target the disbursement of government subsidies and financial assistance to the “actual beneficiaries”. Public money, he declared, should reach the poor and the deserving without any leakage. He announced that he would introduce a bill for “Targeted Delivery of Financial and Other Subsidies, Benefits and Services by using the Aadhar framework”, the expenditure for which is incurred from the Consolidated Fund of India.

In order to make a statement about the disbursement to beneficiaries, the government would need to have some information about how its beneficiary databases are created and maintained and by whom. It would need to have some information about how to identify ghosts and duplicates in these databases, and the steps that result in these ghost or duplicates while creating and maintaining the database. It would need to have some information about the steps of transferring money from the Consolidated Fund of India to the beneficiaries.

Is it unlikely that any government, which has been distributing lakhs of crores to various beneficiaries, will not hold this information? Is it conceivable, therefore, that the Finance Minister could have promised targeted disbursement of government subsidies and financial assistance to the actual beneficiaries, or that money reach the poor and the deserving without any leakage without full information about who beneficiaries are or where leakage is happening?

DOES BENEFICIARY INFORMATION EXIST?

In its Fiscal Policy Statement the Budget of 2018-19 states that it extended scope of DBT to include “in-kind” transfer to individual beneficiaries, transfers to enablers of government schemes and services. According to the statement, up to November 2017, 462 DBT applicable schemes identified across 57 Ministries/Departments and 34 Aadhar Enabled Services from 16 Ministries/ Departments. The ambit of DBT covers major schemes that involve cash transfers, such as Pratyaksh Hanstantrit Labh (PAHAL), Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), pensions and scholarships, as well as in-kind transfers such as food grains and mid-day meals to school children.

Good governance, as expected from Prime Minister Narendra Modi, would require that this information is not only audited by the CAG, but is available on the websites of the government under Section 4(b)(xii) of the Right to Information Act, 2005 (RTI).

Even into the thirteenth year of the Right to Information Act, most public authorities do not satisfy the spirit or even the letter of public disclosure under Section 4 of the Act. For the most part, therefore, information about “the manner of execution of subsidy programmes, including the amounts allocated and the details of beneficiaries of such programmes” is absent from government websites.

Two years on from the promise to deliver this transparency, perhaps the Ministry of Finance, or the government would be able to share this information?

Asked under the RTI to provide information, neither the Ministry of Finance nor any government ministry or department has been able to provide any information about the laws, rules and procedures that create any beneficiary databases, the existence of such databases, or about procedures or algorithms that provide them with an ability to distinguish genuine from duplicate and ghost beneficiaries. Neither have they been able to provide a single audit report or study that shows how fake beneficiaries have been added to beneficiary databases.

Neither the Ministry of Finance nor any government ministry or department has provided any indication of the steps in the flow of funds from the Consolidated Fund of India to the hands of the beneficiaries or how they have changed after the Finance Minister’s Budget Speech for 2016-17 from what existed before.

Furthermore, neither has been able to indicate the basis for the decision to transfer benefits and subsidies through an Aadhaar based payment system run by a non government private company, the National Payments Corporation of India (NPCI), in place of the traditional National Electronic Funds Transfer (NEFT) run by the RBI. Serious concerns about money transfers through Aadhaar payments being unauditable and similar to hawala remain un-investigated by the CBI and the Enforcement Directorate.

There should be complete clarity about the amounts of large money transfers in the form of DBT to millions of beneficiaries. According to the Fiscal Strategy Document of the Budget to 2018-19, since the inception, 52 crore beneficiaries (including cash and in-kind schemes) have received Rs 246,133 crore through DBT, of which Rs 63,190 crore have been transferred in FY 2017-18 (as on 30.11.2017). 95.4% payments have been made through electronic transfers. On the other hand, according to the BJP, beneficiaries have received Rs 382,184 crore through direct benefit transfers (DBT) since FY 2014-15. According to Nandan Nilekani, former chairman of Unique Identification Authority of India (UIDAI), which designed the Aadhaar number as an identifier for demographic and biometric data submitted to it, and current advisor to NPCI, over Rs 95,000 crore were transferred using the Aadhaar Pay of NPCI in the last financial year alone.

GHOSTS AND DUPLICATES RECEIVING BENEFITS?

UIDAI and Ministry of Finance must certify that this money has been transferred to real and genuine beneficiaries. Neither the recipients’ database nor the money transfers have been audited or seem to have been verified by the CAG. Furthermore, no beneficiary database, or even the basis for inclusion or exclusion of beneficiaries from this database, is available with the public. The UIDAI has stated unambiguously that it takes no responsibility for the use of Aadhaar. It cannot recognise the use, or the absence of use, of Aadhaar in any business process. Neither can it certify the beginning, progress or completion of the business process.

The UIDAI has also admitted that it does not certify the biometric or demographic data associated with any Aadhaar number. It seems to have no view about the number of unique records based on biometric or demographic fields. It doesn’t even know if there was an enrolment operator, belonging to a private agency appointed by one of the 20 registrars whose enrolments make up most of the Aadhaar numbers, in the 600,000 villages, 5,000 towns and cities, or even the 707 districts where enrolment allegedly happened. It has no information about the original documents of proof of identity, address or birth used to capture the demographic data for Aadhaar. Furthermore, the Aadhaar database has never been verified or audited. It is the world’s largest database of ghosts and duplicates. Using the Aadhaar to create or modify any database can, therefore, entail the risk of populating those databases with duplicates and ghosts.

It is a surprise that the UIDAI cannot, and does not, certify the individuals in any business process as real persons or genuine beneficiaries. It does not certify the delivery of subsidy, benefit or service. It does not certify any beneficiary as being genuine or even real. Money transferred using Aadhaar must not be siphoned to duplicate or ghost beneficiaries or become untraceable. Prime Minister Modi needs to ensure that his objective of a leak-proof system gets operationalised.

Tax money makes up the Consolidated Fund of India that finances benefits, so gaps in transparency are a cause for concern. The trust placed with the Ministry of Finance by the PM must be shown to be justified. Not only will the CAG have to rise to the occasion, but so will India’s premier investigation agencies and plug the DBT being siphoned through Aadhaar payments. Perhaps the Supreme Court will take cognisance of possible leakages during the tenure of two successive governments and ensure complete accuracy and transparency in the list of beneficiaries given lakhs of crores of rupees from the Consolidated Fund of India.

Dr Anupam Saraph is a renowned expert in governance of complex systems and advises governments and businesses across the world. He can be reached @anupamsaraph.