With general elections merely weeks away, the UPA government has revised the cap on cooking gas cylinders to 12 and put on hold the direct benefit transfer (to bank account of beneficiaries) for LPG cylinders, fearing a backlash from a section of population that could have been deprived of fuel subsidy for lacking the Aadhaar number or bank account.

Touted as a game-changer, direct benefit transfer (or DBT) was expected to be a winning formula for the coming elections by the Congress. But the government’s decision now will freeze a mammoth exercise undertaken by the oil marketing companies (OMCs), distributors and banks to transfer the subsidy directly in consumer's account.

This comes weeks after supreme court made Aadhaar optional in an interim order in September 2013.  Earlier, the government had decided to provide direct cash subsidy on food, fertiliser and fuel, which accounted for most of the Rs 2.5 lakh crore annual subsidy.

But AP Singh, deputy director general of UIDAI, said the linkage of Aadhaar with service delivery required a change in processes and use of information technology – something that can’t happen overnight.

Defending the Aadhaar programme, he said DBTL (or DBT for LPG subsidy) was introduced only last year – nearly three years after UIDAI became functional. “That (getting LPG subsidy) is not the reason people got enrolled (for Aadhaar) in the first three years,” Singh said. “Our USP remains cleaning the beneficiary database and providing identity authentication services. Aadhaar is still being used for cleaning the database of LPG consumers to ensure that a consumer doesn’t have multiple connections.

“Aadhaar is still being used as a proof of identity if one wants an LPG cylinder."

He said as of now 120 government and private organisations are using Aadhaar authentication services. The government users include agencies responsible for distribution of social security and scholarship payments. The private agencies belong to telecom, insurance, banks, m-commerce and e-commerce verticals.

DBT concern in ruling party

Senior Congress leaders who had slight apprehensions about risks involved in the DBT rollout, which could have left out of its ambit a substantial section of the population that is yet to enroll for Aadhaar or get a bank account, had struck down the cash transfer option related to food and fertiliser.

The decision comes as relief to citizens who were put under pressure by OMCs to submit their Aadhaar number to LPG distributor and the bank to avail the subsidy. The other option would have left a huge hole in most pockets – buying the cylinder after paying the market price (Rs 1,240; could vary in some states) against the subsidised rate of Rs 451.

Consumers, including those already getting subsidy payments in their accounts, will get the LPG cylinders in the old fashion, information and broadcasting minister Manish Tiwari told the media after Thursday’s cabinet meeting.

A senior UIDAI official told Governance Now that till December 2013, the petroleum ministry had transferred Rs 2,800 crore subsidy to 1.9 crore consumers of LPG cylinder in 289 districts. This amounted to 4 crore DBTL (DBT for LPG) transactions; 1 crore transactions were recorded in December itself, the official said.

Consumers were being paid a subsidy amount of Rs 435, which was transferred in the bank accounts.

While the decision to delink subsidy for LPG cylinders from DBT is seen as a severe blow to the Aadhaar-enabled service delivery model, the UIDAI believes that DBT is just one of many applications of Aadhaar, and its key USP remains providing identity authentication services, which are being used by many government and private sector agencies.

On average, UIDAI receives 1 lakh authentication requests from these agencies every day, UIDAI’s Singh said. “The authority has the capacity to process 10 crore authentication requests per day and even this capacity could be scaled up further whenever required,” he said.

The authentication services have recorded a 96 percent success rate, and the target is to achieve 99.59 percent, Singh said.

Confident about the future of Aadhaar programme post-elections, Singh said going by petroleum ministry’s own estimate, countrywide rollout of DBTL could lead to a saving of Rs 12,000 crore. “I don’t think any government will be averse to reducing such leakages in the service delivery system,” Singh said.