- Associated Press - Tuesday, January 1, 2013

NEW DELHI — India will send billions of dollars in social welfare money directly to the poor under a program inaugurated Tuesday that aims to cut out bureaucrats blamed for the massive fraud that plagues the system.

Previously, officials handed out cash to the poor only after taking a cut — if they didn’t keep all of it for themselves — and were known to enroll fake recipients or register unqualified people. The new program will see welfare money directly deposited into recipients’ bank accounts and require them to prove their identity with biometric data, such as fingerprints or retina scans.

Finance Minister P. Chidambaram has described the venture as “nothing less than magical,” but critics accuse the government of hastily pushing through a complex program in a country where millions lack access to electricity or paved roads, let alone neighborhood banks.

The program is loosely based on Brazil’s widely praised Bolsa Familia program, which has helped lift more than 19 million people out of poverty since 2003. India has 440 million people living below the poverty line.

“In a huge new experiment like this you should expect some glitches but these will be overcome by our people,” Mr. Chidambaram said.

He appealed for patience with the program, which he called “a game-changer for governance.”

As a first step, the government plans to begin directly transferring money it would spend on programs such as scholarships and pensions.

Eventually, the transfers are expected to help fix much of the rest of India’s welfare spending, though Mr. Chidambaram said the program would exempt the government’s massive food, kerosene and fertilizer distribution networks — which are blamed for much of the corruption.

The program will transfer cash into bank accounts using data from a government project working to provide every Indian with identification numbers linked to fingerprints and retina scans. Currently, hundreds of millions have no identity documents.

On Monday, 208 activists and scholars published an open letter expressing concern that the government was forcing the poor to enroll in a program without safeguards to protect their privacy. They also expressed fears that the government planned to eventually replace the food distribution system for the poor, the largest program of its kind in the world.

“A very important concern is, are we ready for this sort of thing?” asked Reetika Khera, a development economist with the New Delhi-based Institute for Economic Growth.