Direct Cash Transfer scheme by UPA Govt,

UPA's game changer: What is the Direct Cash Transfer scheme?

The Direct Cash Transfer, a new system under which the beneficiaries receive cash directly in their bank accounts.

NEW DELHI: In an ambitious policy initiative that could prove to be a game-changer for UPA-II, Prime Minister Manmohan Singh announced direct cash payout of subsidies to beneficiaries from Jan 1, 2013. The subsidy amount would be transferred to beneficiaries' bank accounts linked to Aadhaar cards.

What is direct cash transfer of subsidies?

#The Direct Cash Transfer, a new system under which the beneficiaries receive cash directly in their bank accounts, is expected to enable delivery of the government's subsidies and welfare measures to the intended targets without pilferage.

#To make things simpler, instead of fuel, fertiliser and food subsidies given to BPL families, the scheme will involve direct cash transfer to their bank account, that is Rs 32,000 per year.

#To avail the direct cash transfer of subsidies one must be registered under the Aadhar scheme.

#The DCT architecture, being anchored by the planning commission, involves departments of financial services, unique identity authority (Aadhaar), information technology, expenditure, posts, rural development, social justice and empowerment, tribal affairs, minority affairs, higher education, school education, health and family welfare, women and child development, labour and employment, petroleum and natural gas, fertilizers, and food and public distribution.

What is the amount of subsidy a household is offered?

#BPL families will get Rs 32,000 per year.

#The government has fixed the poverty line at Rs 66.10 per day for urban areas and Rs 35.10 for rural regions.

How will the cash be transferred?

#The government plans to conduct the transfer through the bank account that is link with the Aadhaar Unique Identification (UID) scheme.

# The Unique Identity Authority of India (UIDAI), which is implementing the Aadhar scheme, has already enumerated around 200 million people from 2006 to now and has a target of reaching 600 million people within the next 18 months.

#Consumers will have to buy goods (food, kerosene, etc) at market price. The subsidy component in rupees will later be deposited in their bank accounts.  To implement the project, banks will pitch in as part of their financial inclusion drive to help people open bank accounts.

When will the scheme be implemented?

#The government has already announced that transfer of subsidy directly into bank accounts of beneficiaries in 51 districts will start from January 2013 with a target to cover the entire nation by April 2014. To ensure this, the planning commission has decided that all new schemes will now be enabled by Aadhaar number.

#Initially, the government will implement the scheme for cash transfer to the beneficiaries' accounts in 51 districts from January 1, 2013. The scheme will be worked in 18 states from April and in the rest of the country later in 2013, Manmohan Singh said.

#The subsidies and schemes are worth Rs 3.23 lakh crore ($65 billion) and the DCT is scheduled for launch on January 1.

#The scheme will cover 18 states and union territories by April 2013 and it will be extended to 16 more states and union territories by April 2014, according to the prime minister's office.

# The government can immediately roll out the cash transfer scheme for certain welfare schemes such as scholarships and pensions and unemployment allowance, as pilot projects had been executed in certain parts of the country, including in East Delhi.

What are the Benefits of direct cash transfer scheme?

#The scheme is expected to cut down waste and corruption in distribution of subsidised items, the prime minister said, chairing the first meeting of the National Committee on Direct Transfers.

#The ultimate aim of this move is "a completely electronic cash transfer system for the entire population", an official in the PMO said.

#The scheme is aimed to cut down wastage, duplication and leakages and enhance efficiency in the delivery of welfare schemes, as also to improve targetting, reduce corruption, eliminate wastage, control expenditure and facilitate reforms.

How will the direct cash transfer scheme benefit the economy?

# By putting money into the hands of the poor the government is empowering the poor who can buy things in the market. This sudden rise in the poor people's purchasing power will help boost the market and the economy.

 

Yahoo! India News , 27^th Nov’12.

Emkay’s error leads to Rs 650-crore selloff; Nifty crashes by 900 points

Emkay’s Error leads to Rs 650-crore selloff; Nifty crashes by 900 points

6 Oct, 2012, 06.23AM IST, ET Bureau  

On a quiet Friday morning, a young trader at a Mumbai brokerage made what could be the biggest mistake of his life - confusing the value of a client's order with the number of shares. Instead of selling stocks worth Rs 34 lakh, he punched in orders that amounted to a Rs 650-crore selloff. Within seconds, the market went into a tailspin and his employer Emkay Global  was left scrambling for cash. It was a reminder that the stock market, often perceived as a barometer for economic prosperity, could be amazingly vulnerable.

The bellwether Nifty crashed by 900 points (more than 15%) amid heavy volumes and the market shut down for 15 minutes, with arbitrageurs who cash in on the difference between the spot and futures markets taking a heavy hit. Friday's development may be raised at the meeting between Finance Minister P Chidambaram and the Sebi board.

Emkay, whose trading terminals have been frozen following the incident, will have to organise funds by Tuesday to resume business. The brokerage did not ask National Stock Exchange to cancel the trades, but bought back the shares at a higher price. In the bargain, it is set to have taken a blow of around Rs 80 crore, of which a portion was organised on Friday itself. The brokerage, which has a net worth of Rs 148 crore, has assured NSE that it was arranging funds and would meet its obligation early next week.

Emkay Global executed the trade on behalf of an institutional client for a so-called basket order for sale of Nifty shares such as ITC, Tata Motors and Reliance Industries  etc. "The intention was to sell Rs 34 lakh worth of shares in two tranches of Rs 17 lakh each. But the orders were executed inadvertently as "17 lakh Nifty to be converted into a basket". It made all the difference as the value of sale was replaced by the quantity to be sold... The dealer has not been sacked," said a person aware of the transaction.

But the market snapped its four-day winning streak and ended in the red at 5,747, down 0.7%. Emkay shares dropped 10% at Rs 31.10. Though the broker squared off the trade after the market plunged, it has opened itself to an investigation by NSE and probable action by Sebi, the capital markets regulator. "While the exchange systems functioned normally without any glitch, the above-abnormal trades caused market closure automatically due to the index circuit filter getting triggered," NSE claimed.

Trading, which stopped at 9:51 am, resumed at 10:05 am.

"The event," said UR Bhat, MD, Dalton Capital Advisors, "brings to bear control failures at multiple levels. With IT-enabled systems allowing easier intervention and controls, theoretically such a situation should not have arisen."

Since the 15% fall was the result of an erroneous order rather than marketwide panic, trading was not halted for the mandatory two hours, according to an NSE official.

Other stocks in the basket sale included ITC, Tata Motors, Reliance Industries, Hindustan Unilever, Infosys, ICICI Bank, HDFC and HDFC Bank. While Emkay stands to be the biggest loser, gainers would be those who picked up the blue-chip shares at the day's rock-bottom price. For instance, 8 lakh Tata Motor shares changed hands at Rs 242 apiece, 21% below the previous closing price. Similarly, 5 lakh HUL shares were purchased at Rs 446, or 21% below their previous close.

"The market circuit filter got triggered due to entry of 59 erroneous orders that resulted in multiple trades for an aggregate value of over Rs 650 crore," said the NSE release soon after the order.

Since the client was an institution, the exchange system accepted its order without any margin. Also, since the stocks in the basket were part of the futures and options segment, price limits did not apply to them and trading was halted only after the Nifty hit the lower circuit.

NSE, which will complete its investigation on Monday, is examining whether front-end checks and balances were in place at the brokerage.

How it all went wrong

9.15 am: Market opens normally, NSE's Nifty declines 0.47%

9.50 am: Nifty crashes over 10% triggering the circuit filter, trading automatically stops

9.51 am: Only existing orders executed, Nifty falls nearly 15.5%, or 900 points

10.00 am: NSE re-opens trade with pre-open session

10.05 am: Pre-open session ends; normal trading resumes

11.17 am: NSE issues first clarification saying circuit filter triggered on account of abnormal orders

11.52 am: NSE issues second clarification that said the entry of 59 erroneous orders resulted in multiple trades for an aggregate value of over Rs 650 crores

12.46 pm: NSE says it has stopped Emkay Global Financial Services from trading