Cash Transfers Using Aadhaar!
People always wonder what Aadhaar has got to do with Cash Transfers - and specifically for LPG cylinders. The concept is really quite simple.
In India, the government gives all residents a rebate on LPG cylinders - the intent is to enable people to move from kerosene and other unhealthy methods of cooking to a cleaner and safer method - and not worrying about the incremental cost (if any). As such even though the market price for a cylinder is about Rs. 800, we pay Rs. 400.
However the intent and execution of the program has always led to significant leakages - and as a result the government has been looking for ways to continue to offer the benefit in a fair and efficient manner. In many cases people have multiple gas cylinders and there is no way to track how many cylinders they got the rebate for. The intent was to provide the rebate for up to 6 cylinders per year.
Enter Aadhaar - a way to ensure uniqueness. Since residents can only receive one Aadhaar number, it is simple to ensure that no one individual is getting the benefit multiple times. So by linking the Aadhaar number to the gas companies, one knows that a given resident only has one cylinder that qualifies for the benefit. One may have multiple cylinders against one's Aadhaar number - but the benefit can only be availed 6 times per year for that individual, not for each cylinder.
Administering the benefit has also been done intelligently - each resident now has a bank account linked to their Aadhaar number, and when they get a cylinder, the rebate is simply credited directly to the Aadhaar Linked Bank Account.
The vehicle of the Aadhaar Linked Bank Account is really clever - the user may change their bank account but doesn't need to inform the gas company - instead they just update the central system (run by the National Payments Corporation of India) with the new bank account details. ANd tomorrow if anyone else wants to also send you money, they can just send it to your Aadhaar number.
Cash transfers using the Aadhaar scheme have successfully impacted more than 30M registered users and it is more than likely that in future all rebates, insurance claims and other cash transfers (payroll, p2p money transfer etc.) can be administered in a safe and efficient manner using Aadhaar.
Almost anyone who deals with disbursing money to individuals will have a need for Aadhaar-based cash transfers. Send me your thoughts on where else it can be used.