Linking cash deposit for LPG subsidies to Aadhaar is a sham

June5, 2013... Deccan Herald

This is a discussion that took place between me and one of the authors of an article on aadhaar-DBT linkage. Here is the link to the article:

 http://www.deccanherald.com/content/336875/linking-cash-deposit-lpg-subsidies.html

I am posting till where we went in the discussions. Another of my reply to the last comment has been deleted by the site moderators so I am posting in my blog.

Mukesh Kamath:

I know some people having many gas connections. They take excess cylinders from agencies and supply to commercial establishments. Even with aadhaar nothing stops a person from getting another connection in his wife's name. DBT for LPG will cause little hardship to the housewife as she needs to keep aside higher sum for cylinder purchase. However diversion will reduce because the cylinders will be sold at market rates to consumers. If agency fellow gets same amount selling to consumer or hotel then there is no benefit in diversion.

I completely disagree with the following

"To siphon LPG subsidy(In the old/present system), the LPG cylinder would have to be supplied to an ineligible (non-domestic) customer who would then pay the subsidy amount to the eligible customer in whose name the connection exists and the

subsidies pocketed/shared. This is highly improbable and easily detectable." Basically did not understand what is the meaning of that and wonder how this collusion can be detected.

Mathew:

Hi Kamath,

The whole point in my article could be summarised as follows.

1. LPG customers and their consumption pattern of subsidised cylinders could be determined by linkage to presently available customer number (and address). There is no need for any other number, such as electric meter number of UID number. (The people you "know having many gas cylinders" would have many customer numbers with the same address where the cylinders are delivered.) How cylinders do they have? Would such cylinders add up to 375 million per annum? Are these used for commercial purposes? If so they have to be delivered at a commercial establishment. Connivance of distributer / delivery person is required for this.

2. Crediting subsidy into bank accounts would not prevent use of the subsidised cylinder for commercial purposes.

3. LPG subsidies cannot be siphoned off in cash unless the cylinders are sold. The "ineligible" persons are those who have many cylinders who are not eligible for more than one connection and two cylinders for this connection.

Please read the article carefully to understand the above.

Could you please say how UID numbers and subsidy transferred into bank accounts would prevent misuse of subsidised LPG cylinders?

Mathew

Mukesh Kamath:

Hi Sir, I agree to all points you have mentioned to some extent. The truth lies somewhere in the middle...Even i have some points which looks at the other side of the story.

1) There is collusion between agencies and hotels:

Some agency delivery boys deliver subsidized cylinders to hotels directly or after pilfering(This cannot be controlled in a systemic way without DBT). Our area infact had an illegal bottling plant where subsidized cylinders were pilfered and commercial cylinders were filled.

2) DBT will stop direct collusion:

What DBT will do is stop direct collusion between agency and hotels and give scope for collusion between domestic consumers and hotels(Less likely and limited by the cap). I agree crediting subsidy into bank accounts would not prevent diversion(It prevents collusion between agency and hotels).

3) Reduced benami connections and upper limit on diversion:

One thing that will happen and i am sure you will also agree to this, is that due to the 9 cylinder cap and linking connections to aadhaar benami accounts will reduce(Due to linking) and diversion will reduce(Due to cap). With steps taken for KYC, diversion has already reduced. The additional benefit of DBT over this is given by the next point.

4) Since nearly 30-40% people are reluctant to link aadhaar number with bank account fearing taxmen they will loose LPG subsidy benefit. So corrupt tax evaders/ultra rich privacy advocates will not get LPG benefit. Very rich people earlier had no option but to accept the subsidy. This can also be called as savings.

Considering your idea about uniqueness of addresses, can't two addresses spelt differently refer to the same place or dwelling unit????

Mathew:

I thank you for agreeing with points made by me.

1. How will DBT control collusion between Delivery boys and hotel owners? DBT merely credits the subsidy into the bank account of a genuine customer. The subsidised cylinder could still be delivered anywhere. It is the misuse of the cylinder, which is the problem not the subsidy. Do you think that the siphoning of subsidies of this magnitude is done at the level of delivery boys?

2. If DBT will NOT stop diversion of the cylinder, how ill it stop collusion between agency and hotels? How will DBT stop collusion between these two? Please elaborate.

3. How does DBT or UID numbers reduce benami connections? In what way is UID number superior to existing customer number or the electric meter number that was tried sometime back in Karnataka and given up? Cannot the oil company monitor the number of cylinders consumed against a customer number (upper limit) as well as against UID numbers?

4. If UID / Aadhaar is meant to detect tax evasion, why does not UIDAI and Government say so? Why pretend that it is only for targeted welfare? RBI regulations stipulate that any deposit of cash beyond Rs. 50,000 is not permissible. High value cheque deposits are to be reported to RBI (Income tax). How did Madhu Koda, for example, send out Rs. 4000 Crores? How do you think tax evaders have black money in tax havens? Who are these people? Why is the government not acting against them? If those who are to act against tax evaders take no action now, how do you think that once UID numbers are linked to bank accounts, tax evasion will stop?

5. A person may have any number of houses and addresses. They need not be spelt differently. If one who owns two or more houses has more than one LPG connection, one for each house, how would UID detect this? If UID number can be used to detect such fraud, why can’t customer number be used in the same way?

Our PM’s permanent address is in Guwahati. Should he have a LPG connection there as well as at No. 7 Race Course road.

Mukesh Kamath:

Sorry for late reply... Space considerations make my reply short...

1) Earlier delivery boy was supposed to collect 410 from domestic cons. and 850 from commercial cons(Assume). He was making fake bookings for domestic cons. and delivering to commercial cons. Now he will collect same amount of 850 from everyone. Commercial cylinder rates of 1400 per 19.6 kg cylinder need to be brought down to 1100. Per kg cost difference for domestic and commercial is 60(850/14.2) and 71(1400/19.6) respectively.

2) Point number 1 will stop collusion.

3) Aadhaar cannot be issued to non-existent person so linking gas consumer number to aadhaar will reduce benami connections. Point number 3 makes it superior.

4) It is a carrot and stick approach and govt wants to dangle the carrot before the cart so that it moves a little and later it can use the stick. Goodwill needs to be generated hence carrot first.

5) UID would detect it simply because the person is same. He can't link both gas connections with same aadhaar number. He can't get two aadhaars for doing that.

Mathew:

1. Point No. 1 & 2: You say, “He was making fake bookings for domestic consumers and delivering to commercial consumers. ----- Now he will collect same amount 850 from everyone.” This is your first point. Then you say in point 2 “Point 1 will stop collusion” (between delivery boys and hotel owners). If the delivery boy collects Rs. 850 from the hotel where he delivers the cylinder and the DBT goes into the bank account of the domestic consumer the subsidy (Rs. 850 – Rs. 410 = Rs. 440) “leaks” into this account and the subsidised cylinder is used for commercial purpose.

2. “Aadhaar” is for ALL RESIDENTS. Subsidies are for citizens. Hence, resident non-citizens could obtain subsidies. Data of over 14 Lakhs people in AP data of all people in Delhi who registered before 2010 and data of over 10 Lakh people in Maharashtra has been lost. Don’t you think that some of this could be used for creating fake IDs for LPG customers? UIDAI’s EAs have been caught making fake IDs. A FIR is filed in Bangalore. Fingerprints could be easily faked. UID number is NOT superior to customer number, since the number of cylinders consumed would reveal whether they are put to commercial use or not. A domestic consumer will usually use about 9 cylinders a year. This is the limit fixed now. As per Oil Company norms you cannot book a cylinder within 21 days of the receipt of the previous cylinder.

3. Your Point 4: What is the “carrot”? Firstly, carrot is dangled not before carts, but in front of donkeys (in the proverb)! Are you suggesting that the Govt is (and should) treat people like they were donkeys? What is the “stick” that you imagine will come later?

4. On your Point No. 5, please send a RTI query to UIDAI and ask them how many duplicate IDs they have detected so far and you will see the stupidity of the UID scheme.

6. What happens when two families live at the same address and have two kitchens? How would UID stop politicians and the oil mafia from forcing Oil Companies to divert LPG in tanker loads for commercial use and accounting for the same against consumers who although they have connections do not consumer cylinders, since they have gone away for long periods? The subsidy need not be claimed through DBT, but the LPG is misused.

Mukesh Kamath:

1.       Yes the subsidy goes into the account of the domestic gas consumer and he can’t be cheated of his share of subsidy for consuming gas. This assumes that a consumer of gas indeed needs gas and will consume it. We cannot do anything to a poor person who takes gas connection and diverts gas cylinders to hotels and makes do with kerosene stove. Such people will indeed benefit and you can say subsidy leaks. The difference is it leaks to the consumer and not gas delivery boy.

 2. Aadhaar is for all residents. Subsidy is for citizens. This is a call the government has to take. I agree with you in saying that we need to find out who are those non-citizens who have aadhaar numbers who are benefiting. Their aadhaar number should be cancelled. Yes fake IDs can be created to claim benefits but this can be detected. Diversion of cylinders has already reduced a lot by the steps you mentioned.

3.       Carrot is the subsidies and stick is the denial of subsidies to the rich. Donkeys are the people. It is better to treat people as donkeys since they respond by working hard. If you keep supplying them with free food they behave like rats and multiply.

4.       Duplicate IDs were a result of several factors. Same pen drive containing enrolment records might have been used two times to load the same records twice. Two distinct persons might have been flagged as duplicates by an error in matching records. Real duplicates might have gone through and given two aadhaars. Finally real duplicates might have been accurately caught. The strictness with which matching is done, if it is more, two distinct persons start getting classified as duplicates and if strictness is less real duplicates go through. I tried my best explaining without terms such as FPIR,FNIR etc. Mr. Thomas you are deliberately trying to mislead the country. Duplicates which have gone through as distinct aadhaar are less than 1 lakh for entire country of 124 crore. Only one such case has come in media. This is an accuracy unmatched by any other technology.

5.       I see that you have given up on point number 5. Deliberately trying to mislead people by hook or by crook. So invent a few more such silly ruse.

6.       Very rarely do two families living in same place have two kitchens. Gas agencies do allow two connections to the same house address. I am sure there will be two different heads for the two families and they can link their connections to two different aadhaar numbers. Gas tankers used to be priced at subsidized rate earlier times. If now tankers move at market rates subsidy has to go into many different accounts. Not a single politician’s account. And another thing is gas booking is completely computerized now and fake bookings are nonexistent. You cannot make a call to book cylinder from someone else’s registered mobile number. So diversions will also be less.

How John D. Rockefeller Lived on Borrowed Time for Forty-five Years

John D. Rockefeller, Sr., had accumulated his first million at the age of thirty-three. At the age of forty-three, he had built up the largest monopoly the world has ever seen—the great Standard Oil Company. But where was he at fifty-three? Worry had got him at fifty-three. Worry and high-tension living had already wrecked his health. At fifty-three, he “looked like a mummy,” says John K. Winkler, one of his biographers.

At fifty-three, Rockefeller was attacked by mystifying digestive maladies that swept away his hair, even the eyelashes and all but a faint wisp of eyebrow. “So serious was his condition,” says Winkler, “that at one time John D. was compelled to exist on human milk.” According to the doctors, he had alopecia, a form of baldness that often starts with sheer nerves. He looked so startling, with his stark bald dome, that he had to wear a skullcap. Later, he had wigs made- at $500 apiece—and for the rest of his life he wore these silver wigs.

Rockefeller had originally been blessed with an iron constitution. Reared on a farm, he had once had stalwart shoulders, an erect carriage, and a strong, brisk gait.

Yet at only fifty-three—when most men are at their prime—his shoulders drooped and he shambled when he walked. “When he looked in a glass,” says John T. Flynn, another of his biographers, “he saw an old man. The ceaseless work, the endless worry, the streams of abuse, the sleepless nights, and the lack of exercise and rest” had exacted their toll; they had brought him to his knees. He was now the richest man in the world; yet he had to live on a diet that a pauper would have scorned. His income at the time was a million dollars a week—but two dollars a week would probably have paid for all the food he could eat. Acidulated milk and a few crackers were all the doctors would allow him. His skin had lost its color—it looked like old parchment drawn tight across his bones. And nothing but medical care, the best money could buy, kept him from dying at the age of fifty-three.

How did this happen? Worry. Shock. High-Pressure and high-tension living. He “drove” himself literally to the edge of the grave. Even at the age of twenty-three, Rockefeller was already pursuing his goal with such grim determination that, according to those who knew him, “nothing lightened his countenance save news of a good bargain.” When he made a big profit, he would do a little war dance—throw his hat on the floor and break into a jig. But if he lost money, he was ill! He once shipped $40,000 worth of grain by way of the Great Lakes. No insurance. It cost too much: $150. That night a vicious storm raged over Lake Erie. Rockefeller was so worried about losing his cargo that when his partner, George Gardner, reached the office in the morning, he found John D. there, pacing the floor.

“Hurry,” he quavered. “Let’s see if we can take out insurance now, if it isn’t too late!” Gardner rushed uptown and got the insurance; but when he returned to the office, he found John D. in an even worse state of nerves. A telegram had arrived in the meantime: the cargo had landed, safe from the storm. He was sicker than ever now because they had “wasted” the $150! In fact he was so sick about it that he had to go home and take to his bed. Think of it! At that time, his firm was doing a gross business of $500,000 a year-- yet he made himself so ill over $150 that he had to go to bed!

He had no time for play, no time for recreation, no time for anything except making money and teaching Sunday school. When his partner, George Gardner, purchased a second-hand yacht, with three other men, for $2,000, John D. was aghast, refused to go out in it. Gardner found him working at the office one Saturday afternoon, and pleaded, “Come on, John, let’s go for a sail. It will do you good. Forget about business. Have a little fun.” Rockefeller glared. “George Gardner,” he warned, “you are the most extravagant man I ever knew. You are injuring your credit at the banks—and my credit too. First thing you know, you’ll be wrecking our business. No, I won’t go on your yacht—I don’t ever want to see it!” And he stayed plugging in the office all Saturday afternoon.

The same lack of humor, the same lack of perspective, characterized John D. all through his business career. Year later he said, “I never placed my head upon the pillow at night without reminding myself that my success might be only temporary.”

With millions at his command, he never put his head upon his pillow without worrying about losing his fortune. No wonder worry wrecked his health. He had no time for play or recreation, never went to the theater, never played cards, never went to a party. As Mark Hanna said, the man was mad about money. “Sane in every other respect, but mad about money.”

Rockefeller had once confessed to a neighbor in Cleveland, Ohio, that he “wanted to be loved,” yet he was so cold and suspicious that few people even liked him. Morgan once balked at having to do business with him at all. “I don’t like the man,” he snorted. “I don’t want to have any dealings with him.” Rockefeller’s own brother hated him so much that he removed his children’s bodies from the plot. “No one of my blood,” he said, “will ever rest in land controlled by John D.” Rockefeller’s employees and associates lived in holy fear of him, and here is the ironic part: he was afraid of them—afraid they would talk outside the office and give “give secrets away.” He had so little faith in human nature that once, when he signed a ten-year contract with an independent refiner, he made the man promise not to tell anyone, not even his wife! “Shut your mouth and run your business”—that was his motto.

Then at the very peak of his prosperity, with gold flowing into his coffers like hot yellow lava pouring down the sides of Vesuvius, his private world collapsed. Books and articles denounced the robber-baron war of the Standard Oil Company!—secret rebates with railroads, the ruthless crushing of all rivals.

In the fields of Pennsylvania, John D. Rockefeller was the most hated man on earth. He was hanged in effigy by the men he had crushed. Many of them longed to tie a rope around his withered neck and hang him to the limb of a sour-apple tree. Letters breathing fire and brimstone poured into his office—letters threatening his life. He hired bodyguards to keep his enemies from killing him. He attempted to ignore this cyclone of hate. He had once said cynically, “You may kick me and abuse me provided you will let me have my own way.” But he discovered he was to crack. He was puzzled and bewildered by this new enemy—illness—which attacked him from within. At first “he remained secretive about his occasional indispositions,” tried to put his illness out of his mind. But insomnia, indigestion, and the loss of his hair—all physical symptoms of worry and collapse—were not to be denied. Finally, his doctors told him the shocking truth. He could take his choice: his money and his worries—or his life. They warned him: he must either retire or die. He retired. But before he retired, worry, greed, fear had already wrecked his health. When Ida Tarbell, America’s most celebrated female writer of biographies, saw him, she was shocked. She wrote: “An awful age was in his face. He was the oldest man I have ever seen.” Old? Why, Rockefeller was then several years younger than General MacArthur was when he recaptured the Philippines! but he was such a physical wreck that Ida Tarbell pitied him. She was working at that time on her powerful book which condemned the Standard Oil and all that it stood for; she certainly had no cause to love the man who had built up this “octopus.” Yet, she said that when she saw John D. Rockefeller teaching a Sunday-school class, eagerly searching the faces of all those around him—“I had a feeling which I had not expected, and which time intensified. I was sorry for him. I know no companion so terrible as fear.”

When the doctors undertook to save Rockefeller’s life, they gave him three rules—three rules which he observed, to the letter, for the rest of his life. Here they are:

1.       Avoid worry. Never worry about anything, under any kind of circumstances.

2.       Relax, and take plenty of mild exercise in the open air.

3.       Watch your diet. Always stop eating while you’re still a little hungry.

John D. Rockefeller obeyed those rules; and they probably saved his life. He retired. He learned to play golf. He went in for gardening. He chatted with his neighbours. He played games. He sang songs.

But he did something else too. “During days of torture and nights of insomnia,” says Winkler, “John D. had time for reflection.” He began to think of other people. He stopped thinking, for once, of how much money he could get; and he began to wonder how much that money would buy in terms of human happiness.

In short, Rockefeller now began to give his millions away! Some of the time it wasn’t easy. When he offered money to a church, pulpits all over the country thundered back with cries of “tainted money!” But he kept giving. He learned of a starving little college on the shores of Lake Michigan that was being foreclosed because of its mortgage. He came to its rescue and poured millions of dollars into that college and built it into the now world-famous University of Chicago. He tried to help the negroes. He gave money to negro universities like Tuskegee College, where funds were needed to carry on the work of George Washington Carver. He helped to fight hookworm. When Dr. Charles W. Stiles, the hookworm authority, said, “fifty cents’ worth of medicine will cure a man of this disease which ravages the South—but who will give the fifty cents?” Rockefeller gave it. He spent millions on hookworm, stamping out the greatest scourge that has ever handicapped the South. And then he went further. He established a great international foundation—The Rockefeller Foundation—Which was to fight disease and ignorance all over the world.

I speak with feeling of this work, for I probably owe my life to the Rockefeller Foundation. How well I remember that when I was in China in 1932, cholera was raging all over Peking. The Chinese peasants were dying like flies; yet in the midst of all this horror, we were able to go to the Rockefeller Medical College and get a vaccination to protect us from the plague. Chinese and “foreigners” alike, we were able to do that. And that was when I got my first understanding of what Rockefeller’s millions were doing for the world.

Never before in history has there ever been anything even remotely like the Rockefeller Foundation. It is something unique. Rockefeller knew that all over the world there are many fine movements that men of vision start. Research is undertaken; colleges are founded; doctors struggle on to fight a disease—but only too often this high-minded work has to die for lack of funds. He decided to help those pioneers of humanity—not to “take them over,” but to give them some money and help them help themselves. Today you and I can thank John D. Rockefeller for the miracles of penicillin, and for dozens of other discoveries which his money helped to finance. You can thank him for the fact that your children no longer die from spinal meningitis, a disease that used to kill four out of five. And you can thank him for part of the inroads we have made on malaria and tuberculosis, on influenza and diphtheria, and many other diseases that still plague the world.

And what about Rockefeller? When he gave his money away, did he gain peace of mind? Yes, he was contended at last. “If the public thought of him after 1900 as brooding over the attacks on the standard oil,” said Allan Nevins, “the public was much mistaken.”

Rockefeller was happy. He had changed so completely that he didn’t worry at all. In fact, he refused even to lose one night’s sleep when he was forced to accept the greatest defeat of his career!

The defeat came when the corporation he had built, the huge Standard Oil, was ordered to pay “the heaviest fine in history.” According to the United States Government, the Standard Oil was a monopoly, in direct violation of the antitrust laws. The battle raged for five years. The best legal brains in the land fought on interminably in what was, up to then, the longest court war in history. But Standard Oil lost.

When Judge Kenesaw Mountain Landis handed down his decision, lawyers for the defence feared that old John D. would take it very hard. But they didn’t know how much he’d changed.

That night one of the lawyers got John D. on the phone. He discussed the decision as gently as he could, and then said with concern, “I hope you won’t let this decision upset you, Mr. Rockefeller. I hope you’ll get your night’s sleep!”

And old John D.? Why, he crackled right back across the wire, “Don’t worry, Mr. Johnson, I intend to get a night’s sleep. And don’t let it bother you either. Good night!”

That from the man who had once taken to his bed because he had lost $150! Yes, it took a long time for John D. to conquer worry. He was “dying” at fifty-three—but he lived to ninety-eight!