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'Use IT for subsidy transfers to drive industry growth'

Saturday March 17, 2012 04:05:35 PM, Fakir Balaji, IANS

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Bangalore: Use of technology for transferring subsidies directly to beneficiaries and other social initiatives envisaged in the 2012-13 budget will drive growth of IT hardware and electronics sectors, an industry representative said.

"Technology intervention to ensure social schemes such as subsidies reach targetted groups will create huge demand for ICT products and services. Measures announced in the budget are path-breaking for transforming lives of beneficiaries," Manufacturers' Association of Information Technology's (MAIT) executive director Sabyasachi Patra told IANS.

As an apex body, MAIT represents the Indian ICT electronic hardware industry, training and associated services sectors to promote use of technologies for the socio-economic development of the country.

To plug leakages and ensure transparency, Finance Minister Pranab Mukherjee Friday said the government had accepted the recommendations of the task force headed by Unique Identification scheme (UID) chairman Nandan Nilekani - on using technology for transferring various subsidies directly to intended beneficiaries.

"For instance, a mobile-based fertilizer management system (mFMS) has been designed to provide end-to-end information on the movement of fertilizers and subsidies from the manufacturer to retail level," Mukherjee said in the Lok Sabha.

The central government plans to roll out the facility during the ensuing fiscal in phases to benefit about 12 crore (120 million) farmer families in the country and cut subsidies by curtailing misuse of the key farm input.

"The use of mobile device to check slippages in disbursements of fertilizer subsidy through mFMS will not only increase the buying power in rural areas but also creates a huge opportunity to vendors and service providers, as the facility involves front-end and back-end integration and seamless connectivity," Patra said.

Similarly, use of transparency portals by the three state-run oil marketing companies - IOC, HPCL & BPCL - to improve customer service and reduce leakage will create demand for manufacturing a range of ICT products by vendors in the small and medium enterprise (SME) segment.

A pilot project for selling LPG (liquefied petroleum gas) at market price and reimbursing subsidy directly into the beneficiary's bank account is being conducted at Mysore, about 150 km from here.

Another pilot project on direct transfer of subsidy for kerosene into bank accounts of beneficiaries has been initiated at Alwar in Rajasthan. Similarly, the Aadhar (UID platform) has been used to validate ration cards through the Public Distribution Scheme (PDS) in Jharkhand.

"These pilot projects show that substantial economies in subsidy outgo can be achieved by using Aadhar platform. It will be our endeavour to scale up and roll out these Aadhar enabled payments for various government schemes in 50 districts over the next six months," Mukherjee said Friday.

Lauding the initiative for harnessing the power of technology - to ensure direct transfer of subsidy for kerosene into bank accounts of beneficiaries, Patra said national rollout of the project would have a multiplier effect on the electronic hardware industry and benefit intermediaries across the value chain.

"Likewise, the planned fibre optic connectivity of local bodies (gram panchayats) will lead to greater usage of consumer premise equipment and other handhelds devices," Patra pointed out.

In light of recent controversy over the UID scheme between the Home Ministry and the Planning Commission, Mukherjee's announcement that budgetary funds would be provided for Aadhar to enroll an additional 400 million people will encourage the industry to invest in creating the enabling infrastructure.

"As the government intends to use the UID platform to disburse payment to old age, widows and physically challenged and scholarships directly to the beneficiary accounts, the plan will lead to financial inclusion, as its voluminous data can be used for other schemes such as the Mahatma Gandhi National Employment Guarantee Act," Patra asserted.

The association also hailed excise duty reduction to six percent for LED (light emitting diode) lamps and full exemption from basic customs duty on parts, components and sub-parts to manufacture memory cards for mobile phones and LCD (liquid crystal display) television panels.

(Fakir Balaji can be contacted at





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