Friday, February 24, 2012

Make e-payment for big sums to cut graft: Nandan Nilekani, chairman- UIDAI


A panel headed by Nandan Nilekani, chairman of the Unique Identification Authority of India, has suggested all government payments above Rs 1,000 be gradually made or received electronically to cut graft, and bring about greater transparency and accountability.
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The panel has also recommended creation of a network of 10 lakh interoperable micro-ATMs operated by business correspondents to allow people to access their accounts at their own convenience and said all government and financial regulators should recognise Aadhar number as a financial address for receiving and sending funds.

The government's subsidy and electronic benefit transfers are estimated at Rs 3.5 lakh crore, or about 3.5% of GDP, and there is evidence that a large share of these payments is not reaching the beneficiaries due to leakages in system. The suggestions are significant as they come ahead of the Budget, which is expected to give out a strong signal towards efficient subsidy management.

"We have recommended a network of 10 lakh micro ATMs around the country that are going to be small electronic devices in various villages," Nilekani told reporters after submitting the final report on Unified Payment Infrastructure to FM Pranab Mukherjee on Thursday.

Mukherjee accepted the report in-principle and said necessary steps would be taken to implement the recommendations of the report, a finance ministry statement said.

The task force has recommended that a last mile transaction fee of 3.14% with a cap of Rs 20 per transaction be paid by government to banks for government payments.

"This will also lead to positive network externalities such as reduction in leakages and achieving financial inclusion," the report said.

"We have also recommended transaction fee... but the government will take a final decision. This is a platform... for any payment to anyone, be it entailment payment, subsidy payment, procurement payment. We have been given direction to work on this and roll it out in one year," he added.

Frontline development workers, such as school teachers, anganwadi workers, who often do not receive their salaries on time, can also receive their salaries by direct deposit into their accounts at banks and post offices.

It has suggested creation of government e-payments gateway to eEnable straight-through processing and release of funds from finance ministry to the line ministries. It has also suggested self-service banking capabilities through mobile phones for everyone.

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