The most important economic policy in the world is only weeks away

At the very least this is in the top five most important economic policies and yes it is from India:

D-day is 18 days away. On January 1, the Congress-led UPA government will start migrating the delivery of welfare services to a new architecture: straight into an individual’s bank account, verified by a unique identification (UID) number called Aadhaar.

It’s a soft launch. The first of the three stages will unravel in 43 districts where a large percentage of people have bank accounts and Aadhaars. Also, in the programmes earmarked for stage I, worth about Rs 20,000 crore, transfers to bank accounts is already happening; what will change is that they will now be linked to the Aadhaar number to reduce, if not eliminate, duplication.

The complexity of the exercise will increase manifold as more of India is covered in the other two stages, in April 2013 and April 2014. This will also increase as more programmes are added, especially food, oil, fertiliser and employment. In full flow, the money flowing through those pipes could go up to Rs 300,000 crore. So, is the government ready?

This will likely prove part of a much larger move to a reliance on cash transfers and conditional cash transfers.  Eyescans will be used to create unique identification numbers for individuals and in theory 800 million people will be enrolled in this program over the next fifteen months.  (Don’t count on that pace.)  The government is easing the procedural barriers to creating bank accounts.  I am mostly hopeful although I do worry about privacy issues, this kind of identification becoming a more generally used network, and government misuse of the information.

You can read much more at the link.  The virtuous Tim Harford covered some of it here, but most of you have been pretty silent.


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