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Note on Kotkasim's Cash for Kerosene Pilot (by Ashok Khandelwal)

Note on Kotkasim's Cash for Kerosene Pilot (by Ashok Khandelwal)

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Published by: Right ToFood Campaign on Jan 14, 2013
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09/24/2013

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Cash Subsidy for Kerosene Pilot: Poor stand Deprived by Design?
Case of Kotkasim, Alwar, Rajasthan
“Due to scheme consumers are suffering, most have stopped taking kerosene” Food department 
 official at Alwar.
The cash transfer schemes including the present one is primarily to address the question of poor governance without taking into account the impact it may have on the welfare of thepoor and vulnerable.
In Kotkasim block of Alwar district of Rajasthan ‘Cas
h for KeroseneScheme
’ [CFKS]
was launched on 5
th
December 2011 on pilot basis for six months. Office of the Adviser to the Supreme Court Commissioners conducted an assessment study of the Cashfor Kerosene pilot at Kotkasim, Alwar, Rajasthan
.
The assessment study findings are in complete variance with the district administration so faras the impact of the scheme is concerned. Whereas the facts are the same but theinterpretation of the same facts are diametrically opposite. District administration terms thepilot has a huge success and has been extended till December 2012 and it has planned toextend the same to entire district in near future. The study however concludes that the pilot is
nothing more than a ‘denial by design’ and therefore must be clos
ed down. Based on thefindings it recommends that (a) CFKS should be scrapped forthwith (b) high
 
level enquiryshould be ordered to find out under what compulsions the CFKS was launched withoutpreparations (c) a detailed independent assessment should be undertaken of the scheme and(d) alternate strategy is required to check black of kerosene as people are not ready for CFKStype of measure.
The impact of CFKS on use of Kerosene
From day one of the implementation of the scheme the consumption of kerosene has comedown. This has been reported by all the stake-holders namely government, shop-keepers andhouseholds as we shall see in the sub-sections below. The consumption declined with thelaunching of the scheme in December and thereafter it continued declining and reachedalmost zero sales by June-end. Prior to launch the Kerosene use was about 84 thousand KLper month for about 25 thousand card holders which for last six months range between one tofive thousand litres. The average consumption is not even five percent of the pre-pilot perioduse.
The district administration falsely claims that that there is no effective demand forkerosene:
This explanation however does not hold water in the face of critical appraisal of 
government’s own records, the survey findings and the reality of shopkeepers boycott
.
The sample respondents are relatively socially backwardness and economicallydeprived
The assessment study is based on government records, interviews with different stake holdersand a sample survey of 144 households spread over four villages. The sample is biased infavour of official poor as comparatively much larger proportion of BPL, SBPL and AAYhouseholds were covered
 – 
about 55%. Among head of the households, 51% are illiterates;32% up to primary. Out of total of 144 only one reported to be graduate and one postgraduate. 61% are wage earners and only 30% reported to be self-employed. Most of thefamilies are nuclear families as 76% reported one earner
 
Three-fourths of the poor families use kerosene and need to buy from the ration shop
.82% respondents said that they use kerosene. The range of use in the four sample areas varyfrom 68 to 90%. There is thus a demand for kerosene provided there are no barriers in supply.The use however varies in space and time due to various factors. Regular use of kerosene hasbeen reported by 63% of the households and sometime use by another 13%.
CFKS denies access to kerosene to poor and vulnerable
The data suggest that the number of families who lifted kerosene from the dealer declinedfrom around 57% in Oct and Nov 2011 to less than 18 % in the month of May 2012. Therehas been secular decline from January 2012 from 57.1% to 48.6% in Feb, 37.9% in March,30.7 % in April and 17.9% in May. The pattern has been similar for all the four regionsthough with varying degree. In Kotkasim proper the reported decline is relatively sharper:Nov 70%; Dec 58%; Jan 65%; Feb 54%; March 41%; April 38%; May 6.8%.
Peoples’ responses demolish government arguments about decline in kerosene use
 
51% of all respondents reported change in the consumption. When asked about the details of change, 17 of these 68 respondents said that they have stopped buying kerosene due to highcost and inability to bear the cost. The other reasons cited were non-availability of keroseneat ration shops [21] and long procedures and formalities. The other articulated aspects of impact include non-transfer of subsidy account, extra time, wage loss, and extra day for bank operation. If look at the data of Jhadka and Patan Ahir we may conclude that due to CFKS,there is no access due to cost and supply constraint.The patterns of decline in demand indicate towards two dimensions - (a) gradual decline innumber of buyers and (b) all of a sudden fall in the month of May compared to April. Thisdemand pattern raises valid questions about the veracity of the above stated position of thedistrict administration. It rather supports the arguments related to non-availability of thesubsidy in hand and other related issues in the context of point (a) above and role of shop-keepers in the context of point (b).
Thus people did buy kerosene till they could afford atmarket price and was available but stopped when it started pinching and supplychoked.Operating a bank account
is an ‘imposed burden’ on them
 
Possession of 14-digit no frill account is central to the scheme. However, the assessmentstudy suggests that people do not have a need to open an account. Many may have beenpersuaded to open, but do not find much utility. For the poor it is drag on limited resources.Story of accounts makes it quite obvious:(a)
 
Till date only 14258 accounts have been opened including 800 in Dec 2012 prior to visitof Finance Minister- it comes to 58% of total 24604 eligible accounts.(b)
 
Only 6000 accounts were opened by end of Dec 2011(c)
 
Study suggests that only roughly one-fourth families reported a bank account prior toscheme,(d)
 
When asked about the necessity of the bank account, a good number said that it is neededfor subsidy. Over fifty present reported to have opened accounts just for subsidy i.e. aspart of CFKS on persuasion of the district administration(e)
 
People did not open accounts also because of time consuming process, difficulty of process, illiteracy, and lack of awareness and most importantly they do not need(f)
 
Many who had an account reported that first going to bank and then to shop is timeconsuming meaning thereby that operating account is not the effort worth taking
 
(g)
 
Many others directly questioned the very need for it. One dozen respondents asked, “when
earlier it [kerosene] was available without bank account than why now all this
’?,
(h)
 
Dealers who facilitated camps for opening bank accounts said that people weredisinterested in opening accounts.
(i)
 
The process details suggest that the response of the people towards bank account was notvery encouraging initially. This made the administration jittery and persuasive. It isalleged that even threatening strategies were used by the administration to get the accountsopened. For instance, the dealer of Village Pataliya explained how he was beingmistreated by the DSO to procure account numbers from his customers. In fact, onecommon thing reported throughout the survey was the way the consumers were harassedby making ration (including wheat) conditional to the submission of account number. Thedealers who were the agents of this harassment acted on behest of the DSO.(j)
 
Data suggest that several other reasons for less number of accounts include migration, oldage of head of the household, indifference to the scheme, lack of awareness about thescheme and so on.
But primarily it is lack of necessity and paltry sum of subsidy is nomotivation.
(k)
 
The data further suggest that 15.7% households even now do not have any accounts inKotkasim
Mere opening of account is not sufficient:
Because of persuasion and the camp at door step, almost all in the village Kharol haveopened accounts. But none of them have operated the accounts. In fact they have not evenreceived their pass books till date after a lapse of several months. If they do receive theirpassbooks one day, they will still not be able to make trips to the bank to withdraw subsidyand they may not be in a position to buy kerosene at the high cost. If the feedback mechanismdoes kick in, they will one day stop receiving the subsidy as they will not be buying kerosene
 – 
 
effectively having been driven away from the PDS and written about in the media as ‘not inneed of kerosene’.
CFKS is anti-poor, vulnerable and marginalized in essence
Study clearly brings forth the point that a poor cannot wait for subsidy to be deposited inbank. Poor, vulnerable and marginalized would not like to get entangled in issues like whereand when the account will be opened, when the money will be deposited and how and whenthe money will be withdrawn. Rather than getting into these questions the poor will stopbuying kerosene. The Government perhaps is well aware of this reality and by introducing
the pilot Government’s intent
was to deprive the majority access to kerosene by design.
 Blatantly undemocratic practice: Views of elected representatives totally ignored 
Our assessment brings in bold relief that the views of the elected representatives stand totallyignored. To that extent it is the most undemocratic scheme. It is obvious from the fact that aPIL filed by the elected representatives is pending in the high court of Rajasthan on the issue.The point here is that can a scheme should be continued when the elected representatives arenot interested in it.
Scheme was launched without preparation:
 
 Protocol stand violated 
 
The Scheme was launched by the district administration without adequate preparation.Accounts were not opened, subsidy was not deposited, impact on shop-keepers was notevaluated properly, people were not made aware, required precautions were not taken, etc.
 
Scheme is a burden on the banks:

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