A confidential study conducted by the prime minister’s office in consultation with various ministries and the realistic figures has revealed that direct cash transfer (DCT) will save money.

The table prepared by the government is based on the actual money spent by the central government during 2010-11 under various schemes for the needy.

It estimated a realistic leakage under each scheme after thorough surveys. The cost of subsidies during 2010-11 was Rs 2,11,474 crore while the Aadhaar cards will result in the saving more than 33,000 crore.

Even as bitter battle is on between the opposition and the ruling UPA at the election commission on DCT and conflicting estimates as of subsidy are given, it is said that it would plug leakage of funds to the tune of Rs 33000 crore.

While the Planning Commission estimated government's annual subsidy bill at Rs 3,20,000 crore and Montek Singh Ahluwalia felt that cash into bank accounts of beneficiaries based on Aadhaar - digital cards, may plug leakage up to even 30%.

Ahluwalia may have been ambitious in plugging the leakages and eliminating ghost beneficiaries when claimed that it would save a whopping Rs one lakh crore in subsidies.

It is a different matter that in the first phase the government is including only 29 out of the 42 schemes. But by the end of 2013, there will be a complete rollout plan.

The government conducted various surveys in different parts of the country through various agencies to peg leakages in these welfare schemes. For example, in Alwar, kerosene sales fell by about 80% in the first six months when an Aadhaar-based pilot project was implemented there. Secondly, incentive of Rs 34 per litre of kerosene for diversion has ended because subsidy is being transferred into the bank accounts of beneficiaries instead of that of fair price shop owners.

As many as 37 lakh ration cards issued to households in Bihar, Madhya Pradesh, Uttar Pradesh and Orissa between 2006 and 2010 were found fake. Similarly, Karnataka had at least 30 lakh fake ration cards and eight lakh bogus ration cards were cancelled in 12 districts alone in Tamil Nadu.

In Ranchi (Jharkhand) only 67 percent of the wage payments entered in the muster rolls were found to be genuine under MNGRES. However, Chhattisgarh was a picture of success where the leakage was 5 percent and in UP it was almost 80 percent in Uttar Pradesh.

The government divided 31 states into three equal categories. Worst performing (with leakage of 35 percent), reasonably performing (with leakage of 15 percent) and best performing (with leakage of 5 percent). The weighted average of the leakage is about 18 percent.