On Monday, newspapers reported a seven-eight month delay in the National Optical Fibre Network Project, a Rs 20,000-crore project to connect the panchayats with high speed broadband (read story). In effect, this means execution of the scheme becomes a question of logistics if nothing else.

The same day, Prime minister Manmohan Singh held the first meeting of the national committee on the direct cash transfers. At the conclusion of the meeting, PM announced that the direct cash transfer of subsidies will come into effect in January 2013 in 51 districts and will cover 18 states by April 2013 and will link 42 government schemes.

In his concluding address PM said that the government spends a lot of money every year on direct benefits of people in the areas of scholarships, pensions and healthcare. Above it, it spends Rs 3 lakh crore on subsidies also meant for the poor. This money, he said needs to reach the right people if they have to make the right impact. Direct cash transfer will enable the government in distributing these subsidies without any leakage and wastage along the way.

Singh said that the direct cash transfer, which in turn is the way to provide the poor with what is rightfully theirs, will now be a reality thanks to technology and spread of banking services across the country.

He said that to make this dream a reality, India will have to deliver on both its fronts of Aadhar and Financial inclusion and make sure that every last person in India is covered under Aadhar and is able to open his bank account with the help of the 12 digit number.

The prime minister reiterated that the Aadhar number should be available to people on demand.

He urged the individual ministries to digitise their databases and seed them with Aadhar numbers. He said that the states will be helped by the Unique Identification authority of India (UIDAI) and Ministry of IT in their endeavours.

The direct cash transfer comes at a time when the government has to do everything it can to make sure it sails through in the general elections in 2014. The timing of the announcement could not have been perfect.

The scheme is ambitious to say the least as it involves setting up huge IT infrastructure in the country, needs to cover citizens, at least those in the pilot districts, under Aadhar and also provide broadband connectivity so that all these establishments talk to each other to provide smooth and seamless execution of the scheme. Also, cash transfers will never measure up against material subsidies unless adjusted for inflation, a clause that has neither been discussed nor announced.