Cut Money: The Virus of Illfare in Welfare

Professor Maguni Charan Behera *

Cut money or extortion of commission by workers of the party in power at the state or village level in the pretext of helping beneficiaries to avail state-run welfare schemes is a central issue in the present West Bengal Assembly election. In nature and intent it is like hafta collected by gangsters and some unscrupulous policemen in the name of providing protection. Cut money assures schemes for the payers from among potential beneficiaries.

The practice in political party level gives a new meaning to 'social service' which politicians claim doing; but take a price for the service by adopting any means. 'Cut money' is one of them. This illegal commission has ramifications. It points to a number of possibilities; and in fact to practices of diverting schemes to un-deserving hands, and thereby exposing corruption in welfare delivery system.

In recent years welfare delivery system has improved, but at the same time corruption has infected the system severely. This is what is evident from the issue of cut money raised during election campaigning in West Bengal.

Is the practice unique in West Bengal? Is this practice the only means of illegal collection by party workers?

Kumkum Dasgupta's essay published on 18th July edition of Hindustan Times answers to the second question. The author points to another practice of illegal collection of 'cut money' that is prevalent in West Bengal. But in fact the practice is an all India phenomenon, for it is an issue of discussion at least privately among intellectuals across the country.

According to the practice, a certain amount of money is added to infrastructure cost by the contractors participating in bid process for government projects. This additional money above the 'actual' cost of the project goes to unscrupulous bureaucrats, technocrats, local politicians and few others. It does not matter who gets the project, but the practice of adding 'cut money' by each bidder to project cost makes the commission secure for the unscrupulous gang.

Here, the cut money becomes an obligatory component of the project cost unlike the obligatory commission which party workers collect from beneficiaries of welfare schemes. The amount is a deduction from the actual cost of the scheme in the latter practice and causes reduction of the 'actual' amount of the scheme necessary to execute it.

In case of infrastructure, i.e. hiking the cost, the government spends more than the 'actual cost' of the project. The money that comes from the exchequer is not honestly spent on the project. The project or the scheme is executed with less money than actually sanctioned; the amount by which it is less is the 'cut money'.

However, the effect of cut money on the project/scheme is not proportional to the amount by which the actual cost is reduced. There could be multiplier effect, which needs to be objectively investigated, but the fact is that the expenditure is reduced much more than the amount of visible cut money. Reduction of cost due to cut money does not subvert official procedure, but tweaks the latter to feed corruption.

That the money spent to execute a project is very less than the amount available after the cut money is evident from the former Prime Minister Rajiv Gandhi's remark. During his visit to the then Kalahandi district of Odisha, which was severely affected by drought during that time, Rajiv Gandhi had said that only 15 paise reaches intended beneficiaries out of every rupee spent by the government for their welfare.

This malaise shows uncontrolled drain of public money to corrupt people and thus to visibly unproductive uses of resource in the system.

The result is obvious, failure of development schemes in achieving targets. Evaluation of implementation and outcome of schemes or projects, however, does not recognise this uncontrolled drainage of money that becomes 15 paise out of every rupee as a causative factor of failure. No doubt, in execution of schemes some invisible drains exist other than the visible 'cut money'.

This is not all about the culture of 'cut money'. Though Bengal case points to it as a type of its own and as a political culture by associating it with political workers and politicians, it is more spread than it appears. It is evident when in project bidding process; technocrats and bureaucrats get their share. Necessarily, the cut money culture exists as astute system of unscrupulousness beyond apparent political involvement.

Cut money culture in its general intent is not the problem of West Bengal only. It is an all India phenomenon, and exits as is learnt, in various states such as Bihar, Odisha, Jharkhand and even in North-eastern states with variation in modus operandi. However, a proper study is over due to examine the nature, extent and mechanism, etc. of the practice to understand such questions as whether it is a type of its own, a minnow in the large pond or a symptom of socio-economic and political malady.

It merits mention that any measure against corruption, if does not cover all aspects of the entire process, fails to be effective. This is what is noticed with regard to on-line transfer of money to the accounts of the beneficiaries aimed at stopping 'cut money' in delivery of welfare schemes.

Selection of name as beneficiary, checking progress of the work and submission of completion report for subsequent or final release of instalment as parts of the scheme prove to be Achilles Heels. The nexus of party workers (particularly agents of sarpanch or village head/pradhan) and the reporting official/officer finds ways to secure their cut money at these stages. A few practices prevalent in one or the other state are mentioned below to know the modus operandi.

1. Selection of beneficiary depends on the criteria of belonging to the political party of the Panchayat members and to their or their agents' family or nearest kins who form favourite group.
2. In favourite group, more than one member of the family is reported in the list of beneficiary of a particular scheme.
3. False lists of beneficiaries on several schemes are prepared and money shared by the nexus of unscrupulous officers, party workers, politicians, etc.
4. PIL activists often found a beneficiary of several schemes.
5. In some schemes edited photos are prepared to show execution of the scheme by the beneficiary in connivance with the corrupt group.

Cut money culture is watched by the mute tax payers from whose money partial or fully subsidised schemes are given under welfare drive. This raises a few questions. Are welfare schemes of the government meant or used for political interests of the parties in nexus with a gang of corrupt bureaucrats and technocrats?

With mounting tax burden, will the tax payers remain silent spectators when they see the freebies transform the self-reliant producer village economy to an increasingly dependent consumer one and thereby facilitating contract farming by corporate houses? Freebies and other subsidised schemes assure livelihood security and people do not work for securing livelihood by themselves. The situation creates an atmosphere to invite corporate houses and lure the farmers to lease land in the pretext of employment and income.

The trend of freebies has been taken into cognizance by the Madras High Court along with its impact at least two years earlier. The Court remarks in strong words that freebies make people lazy, irresponsible; they resist hard work and become complacent in life.

The crucial point to note is that in the delivery of freebies and other subsidised schemes, the corpus of unscrupulous people accumulates wealth which is a burden to the state exchequer and tax payers as well. Moreover, it thwarts the welfare drive of the government.

Tax payers are not unaware of the malady. Moreover, the cut money culture has not drawn overt attention of opposition political parties (for obvious reasons) in many states, media, and development critiques, though Madras High Court shows its concern from 23rd November 2018.

Before the practice becomes eye shore of the tax payers and become cause of socio-political instability, the government should address it for effective and corruption free governance. The solution to poverty does not lie in freebies, but in making the people self-reliant by teaching them fishing than giving fish.

* Professor Maguni Charan Behera wrote this article for
The writer is at Arunachal Institute of Tribal Studies, Rajiv Gandhi University, Itanagar.
and can be contacted at mcbehera1959(AT)gmail(DOT)com
This article was webcasted on April 02 2021.

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