Smart Cards for a Smart Nation

[Story source: Business Standard]

Recently, Business Standard carried three articles under the Smart Cards byline. The articles – “Smart choice, sloppy plan“, “Andhra villagers now have pension on their fingertips“, “From Dhenakal to Bellary” – track the introduction of smart cards in various states of India.

The first article mentions how the people of Rajasthan are caught up in the problem of plenty. Rajasthan government issued around 100,000 health cards to people in its state for health insurance – but in the process it stopped issuing the smart cards issued by the central government under the National Health Insurance Scheme(NHIS). The central government scheme holds many strengths. It is valid across all states. A lot of research has gone into designing the smart card under NHIS – for example, it will help the migrant labourer since it is acceptable at establishments across the nation. It was also an effort at national standardisation and would have also been an effective tool to collect statistics.

The second article narrates how smart cards have given a boost to financial inclusion efforts in Karimnagar and Warangal districts of Andhra Pradesh. The state government, in a bid to inclucate “banking habits among the poor”, distributed around 200,000 smart cards in the two districts. At the same time, it gave the list of receipients of the cards to the banks who agreed to be part of the project. The banks, consequently appointed Zero-Mass in Karimnagar and FINO (Financial Information Network and Operations Limited) in Warangal to disburse cash from social welfare schemes using the smart cards. This simple chain has helped in reducing chances of corruption and at the same time, drawn in people who were hitherto uncovered by traditional banks.

A FINO smart card

The concluding article talks about similar efforts in the Orissa and Karnataka. This time, Zeromassa and FINO are replaced by the ubiquitous postman and banker. Smart cards are being used to disburse money under the Social Security Pension and NREGP schemes. The project is expected to roll out in December 2008 and BSNL’s assisstance is being sought for connectivity.

The overall picture is that of optimism though the Rajasthan episode calls for eschewing populism. In a country like India where the budget for social welfare schemes are sizeable, smart cards will not only ensure that entire welfare money reaches the intended beneficiaries but will also help in reducing the delivery costs of such welfare schemes.