Direct cash via Aadhaar to save 0.5% of GDP: IMF

Integration of direct cash transfer with Aadhaar will take time but the scheme will help Indian government save 0.5 per cent of the GDP,International Monetary Fund said.

Written by PTI | Washington | Published: April 30, 2013 2:19:19 am

Integration of direct cash transfer with Aadhaar will take time but the scheme will help Indian government save 0.5 per cent of the GDP,International Monetary Fund (IMF) said today.

“… the total savings could be substantial: if the combination of direct cash transfer and Aadhaar eliminates the estimated 15 per cent leakage cited above for the programmes being integrated,savings could total 0.5 per cent of GDP in addition to the gains from the better targeting of spending on the poor,” the IMF said in a report.

It also said the country’s GDP is likely to improve to 5.7 per cent in 2013 and further to 6.2 per cent a year after. For Asia,the economic growth is likely to be 5.7 per cent this calendar and 6 per cent in 2013,IMF said in its ‘Regional Economic Outlook: Asia and Pacific’ report.

Direct cash transfers,which entail direct payments from the government to recipients,can bring down costs and diversion by phasing out middlemen and complex bureaucracies,it added.

The report further said the integration of these two programmes promises further savings.

“…but will involve many challenges: the timeframe for bringing India’s population of 1.2 billion into the Aadhaar programme could extend beyond 2014,and integrating this database with information on individuals eligible for subsidised fuel will take time,” it added.

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