The government on Tuesday extended the terms of reference of the Nandan Nilekani-led task force on direct subsidies on kerosene, LPG and fertiliser to include unified payment infrastructure facilitated by UIDAI's Aadhaar scheme.

"It has been decided to extend the Terms of Reference of the Task Force to include an Aadhaar-enabled unified payment infrastructure," the Finance Ministry said in a statement. Under the Aadhaar scheme of Unique Identification Authority of India (UIDAI), citizens are being allotted a unique identification number. The UIDAI is headed by Nilekani.

As part of its extended terms of reference, the Nilekani-led panel has been told to recommend detailed solution architecture for direct transfer of subsidy by which ministries and state governments can transfer funds into any Aadhaar-enabled bank account on the basis of the unique identification number.

It will also "recommend an architecture for e-banking through inter-operable business correspondents and examine alignment of current standards for devices that will be deployed by them."

The task force has also been asked to suggest a system to align the recommendations of the Inter-Ministerial Group on a Framework for the Delivery of Basic Financial Services using mobile phones with Aadhaar enabled payments infrastructure.

Meanwhile, all ministries have been told to align their pilot projects on direct transfer of subsidies on kerosene, LPG and fertiliser with the recommendations of the Nandan Nilekani-headed task force.

"During this period (till the presentation of final report), along with other pilots, the current pilots being undertaken by the ministries implementing the interim report of the Task Force on Direct transfer of subsidies on Kerosene, LPG and Fertiliser will need to be aligned," the Finance Ministry said in its office memorandum.

The Nilekani-led panel, constituted in February, submitted its interim report on July 5, following which its suggestions were taken up on a pilot basis by the concerned ministries under the supervision of the task force.

In its interim report, that panel had suggested direct cash transfers through banks, ATMs or even mobile banking for beneficiaries of kerosene, LPG and fertiliser subsidies.

Pilot projects for transfer of direct cash subsidy will be launched in seven states -- Tamil Nadu, Assam, Maharashtra, Haryana, Delhi, Rajasthan and Orissa -- from October, according to the roadmap suggested by it.

"The task force will submit its final report on the extended Terms of Reference within three months of the extension of the Terms of Reference," the statement said.  As part of its extended reference, the Nilekani-led task force will identify solutions to incorporate a customer support and grievance redressal mechanism.

It is also to look at the feasibility of extending the solution architecture to include payment instruments apart from bank accounts and post office savings bank accounts with a view to facilitate the fostering of e-commerce.

In addition, the task force will oversee and evaluate the implementation of the solution proposed on a pilot basis through the concerned implementing ministries and suggest a common framework for adoption by all government welfare schemes involving disbursements to individual beneficiaries.

"The solutions devised by the task force should ensure that the entire country can leverage the same payments platforms," the statement said.

The task force has also been asked to suggest ways for harmonising various exercises related to opening bank accounts for financial inclusion and electronic benefit transfers and to "identify and recommend amendments, if any, required to existing government payment and accounting procedures to enable direct subsidy transfers."

"The solutions devised by the task force may necessarily be incentive-compatible for all stakeholders in payments processing, respect beneficiary choice, drive competition, be fully inter-operable and should be an implementable solution," the statement said. The government has also decided to enlarge the task force by adding five new members.

The new members will include a representative from the Reserve Bank, a representative from the Indian Banks Association, the Director of the National Informatics Centre, the Controller General of Accounts (CGA) or one of his representative and the Chief Executive Officer of the National Payments Corporation of India (NPCI).

"The recommendations of the final report on Aadhaar enabled payment infrastructure may also be incorporated in the final report of the Task Force on Direct Transfer of subsidies on Kerosene, LPG and Fertiliser," the statement said.

Concerned over leakage and wastage of public funds, the government had in February constituted the task force under UIDAI chief Nandan Nilekani, to suggest ways to provide kerosene, cooking gas and fertiliser subsidies to intended beneficiaries directly.

The task force, which submitted its interim report in July, will suggest "a model of direct transfer of subsidies ...by re-engineering existing systems, processes and procedures in the implementation process." The panel currently also include secretaries from ministries of finance, chemicals and fertilisers, agriculture, food, petroleum and rural development.