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Passage of Aadhaar Bill to help take forward JAM agenda: CEA

The Lok Sabha on Friday had passed the Aadhaar Bill as a money bill. However, the bill that aimed to give statutory backing to the unique identity number scheme for better targetting of subsidies was today returned by Rajya Sabha to the Lok Sabha with several amendments, with Opposition parties also objecting strongly to treating it as a money bill.

Talking on the various benefits of the Bill, Chief Economic Advisor to the Finance Ministry, Arvind Subramanian told CNBC-TV18 that the passage of the bill is a landmark achievement becaue it will help take forward the JAM (Jan Dhan, Aadhar and Mobile) Agenda.

It can also help in dealing with the ghost beneficiaries of subsidies and help in improving tax administration.

With the passage of this bill many pilot projects can take-off,  said Subramanian.

Arvind Subramanian, Chief Economic Advisor To The Finance Ministry

Below is the transcript of Arvind Subramanian’s interview with CNBC-TV18’s Shereen Bhan.

Q: You coined that phrase the JAM trinity (Jan Dhan Yojana + Aadhaar number + mobile number) and central to that is the Aadhaar and legal sanctity now being given to the Aadhaar number by way of parliament. What will this now mean as far as the next wave of innovations and reforms linked to Aadhaar are concerned?

A: This is really a landmark achievement today because the whole JAM agenda and using direct benefit transfers (DBT) to provide cash to people directly. That agenda which is kind of a social revolution that can be advanced now much more ambitiously and expeditiously going forward because as you know there is a lot of legal uncertainties surrounding that. So, there have been major successes in implementing this with cooking gas and now this will allow it to go forward also in other areas like food, kerosene and even fertiliser which was announced in the Budget. So, in many ways the transformational power of technology, financial inclusion can be harnessed for much more effective social policy.

Q: You were right in pointing out that we have had success in linking liquefied petroleum gas (LPG) and the DBT scheme to the Aadhaar number but what kind of savings could we expect on the subsidy front on account of moving to Aadhaar?

A: In the economic survey we calculated that under full implementation the benefits from PEHEL, just the cooking gas scheme and just from de-duplication not because of subsidy reduction, just from de-duplication eliminating ghost beneficiaries was about 25 percent on that. So, that is the potential, it gives you a potential that can be achieved in other areas where there is a lot of ghost beneficiaries and duplications and so on. I can get many other potential benefits from this bill as well. So, in short it could be really substantial.

Q: We were speaking with Nandan Nilekani and he pointed out that perhaps the next wave of innovation could be linked to the Aadhaar Card once it gets legal sanctity. We understand that SEBI is looking at linking mutual funds to the Aadhaar number as well. What sort of opportunities does this throw up, not just the government use but perhaps also for private sector use?

A: Nandan Nilekani is the expert on how this can be leveraged in other ways, in private sector. In terms of credit systems, credit rating and a host of other areas really. But as far as the government is concerned and in the immediate to short run the use of this for government programs, government subsidies and also in taxation for example, there could be huge benefits if we could use this more and more. We could have great benefits in the tax side as well. In terms of compliance, in terms of getting more information which would improve tax administration. So, in fact the possibilities are limitless.

Q: How soon do you believe we will be ready to link Aadhaar to other subsidy programmes? You talked about fertiliser, you talked about food, do you believe that we are in a state of preparedness to be able to move to the Aadhaar number?

A: The truth is that many of these experiments are already underway in various parts of the country. In food and kerosene in Andhra Pradesh, fertiliser seeds in Uttar Pradesh, many are in pilot stages already. With this many more such pilots can be pushed ahead and then they can eventually be scaled up. So, that is what this bill allows for.