4 ms·

This implementation of DBT sounds crazy. If the market price of wheat is Rs. 30, and the old system was that the ration shop used to sell it at Re. 1 + the rat

by iguy 9y ago

This implementation of DBT sounds crazy. If the market price of wheat is Rs. 30, and the old system was that the ration shop used to sell it at Re. 1 + the ration coupon, then the value of the coupon was Rs. 29. If the new system was that you put Rs. 29 into everyone's bank account, then well maybe the ATM is a longer walk than the shop etc. But if the new system is to give people only Re. 1 then no wonder there's a riot! Am I reading your [1] correctly? The problem is a 30-fold reduction in subsidy, not a new delivery infrastructure?

shripadk 9y ago
Going by your example, the government deposits Rs. 29 into the account. The beneficiary has to pay Rs. 1 and withdraw the rest from bank.
captn3m0 9y ago
You're reading it wrong. You get 29 INR in your bank account, and add another 1 INR to pay 30 to the subsidy to the shop. But while earlier it was just a walk to the shop and getting your ration card stamped, now you must: 1. Go to your bank (which may not even have a branch in your village) 2. Hope that the network is up 3. Confirm that the money has reached your account. If not, go home and retry (1) on another day 4. Withdraw the money and then go buy your ration at the subsidy shop Edit: This the relevant quote from the article: >Earlier, people would take their ration cards [...] and be able to purchase rice at Re 1/kg, with each member of a priority household allotted five kg. Now, [...] – money is first transferred into each household’s Aadhaar-linked bank account. They have to then withdraw this as cash, take it to the local ration dealer and buy rice at Rs 32/kg – of which Re 1/kg comes from the ration card holder [and the rest comes from the subsidy that you withdraw as cash].
- iguy 9y ago
  OK, thanks! Sounds like a massive business opportunity for banking. Your village may not have an ATM but I bet it has cellphone signal. Wasn't every Kenyan SMS-ing money around a decade ago?
  - captn3m0 9y ago
    We're trying this with "Payment Banks". The DBT scheme itself tries to solve it by directly debiting money from your account and crediting it to the shopkeeper's account on a monthly basis automatically, but the real implementation is still cash withdrawls as of now. The Kenyan-SMS has also led to a monopoly of mpesa in the market, which the RBI is trying to avoid by bringing some decent regulations in the space of digital banking.
    - iguy 9y ago
      OK thanks. So maybe it will get there... with some elephant-sized teething difficulties!

by iguy 9y ago

shripadk 9y ago

Going by your example, the government deposits Rs. 29 into the account. The beneficiary has to pay Rs. 1 and withdraw the rest from bank.

captn3m0 9y ago

You're reading it wrong. You get 29 INR in your bank account, and add another 1 INR to pay 30 to the subsidy to the shop. But while earlier it was just a walk to the shop and getting your ration card stamped, now you must: 1. Go to your bank (which may not even have a branch in your village) 2. Hope that the network is up 3. Confirm that the money has reached your account. If not, go home and retry (1) on another day 4. Withdraw the money and then go buy your ration at the subsidy shop Edit: This the relevant quote from the article: >Earlier, people would take their ration cards [...] and be able to purchase rice at Re 1/kg, with each member of a priority household allotted five kg. Now, [...] – money is first transferred into each household’s Aadhaar-linked bank account. They have to then withdraw this as cash, take it to the local ration dealer and buy rice at Rs 32/kg – of which Re 1/kg comes from the ration card holder [and the rest comes from the subsidy that you withdraw as cash].

iguy 9y ago
OK, thanks! Sounds like a massive business opportunity for banking. Your village may not have an ATM but I bet it has cellphone signal. Wasn't every Kenyan SMS-ing money around a decade ago?
- captn3m0 9y ago
  We're trying this with "Payment Banks". The DBT scheme itself tries to solve it by directly debiting money from your account and crediting it to the shopkeeper's account on a monthly basis automatically, but the real implementation is still cash withdrawls as of now. The Kenyan-SMS has also led to a monopoly of mpesa in the market, which the RBI is trying to avoid by bringing some decent regulations in the space of digital banking.
  - iguy 9y ago
    OK thanks. So maybe it will get there... with some elephant-sized teething difficulties!