Chief Minister Hemant Soren ordered an inquiry into an alleged scam in a scholarship scheme for pre-matric students from minority communities in Jharkhand, a day after a report by The Indian Express on the matter.

Speaking to reporters in Jharkhand’s Dumka city, Soren said: “We have just got to know about the scam and very soon, there will be action.”

The chief minister said that the scam, which involves the alleged diversion of funds of around Rs 61 crore, was flagged last year itself and that the state’s chief secretary has taken cognisance of the matter.

“We will immediately rectify the system of verification and make sure this does not happen again,” Soren said. “These scholarships are important for the students.”

The scam

The alleged scam pertains to a nexus of bank staff, middlemen, school and government employees who allegedly siphoned of funds worth Rs 61 crore from a Central government-funded scholarship scheme for poor pre-matric students from minority communities – Muslims, Christians, Sikhs, Parsis, Jains and Buddhists.

According to The Indian Express, the scam was carried out at various levels, right from the verification process of eligible students. The beneficiaries need to register themselves at the National Scholarship Portal by submitting their Aadhaar number, bank account details and other documents. The disbursement of the scholarship happens once a year, usually in April or May, and the registration and verification is done annually between August and November. The alleged scam was carried out in the distribution of scholarships for 2019-’20.

The Soren-led government came to power in the state in December 2019.

The modus operandi

Middlemen, in connivance with bank staff, opened accounts of students and obtained their fingerprints for Aadhaar verification. However, several students either did not receive the scholarship amount, or received a small fraction of the same, according to The Indian Express.

In one of the instances reported by the newspaper, Rohit Kujjur a Class 10 student of Sarfaraz Development Academy Mission High School in Kurgi in Ranchi said: “I had given my fingerprints and Aadhaar details but I didn’t know an account had been created in my name. I didn’t get any money.” Records however show that Kujjur received Rs 10,700 in his Jharkhand State Cooperative Bank account for hostel students. Kujjur also said that his school does not have a hostel facility, even as the scholarship amount disbursed on his name was designated for educational institutions having hostels.

To be eligible for the scholarship, students need to score at least 50% in their class exams. Students from Classes 1 to 5 receive Rs 1,000 per year and students of Classes 6 to 10 receive Rs 10,700 a year if they are in a hostel or Rs 5,700 a year if they are day scholars.

In some other cases, Aadhaar, bank details and fingerprints of people who are not even students were taken. In Lohardaga district, Rajiya Khatun, whose husband is a tailor, was asked to provide her details and told that Rs 10,700 was coming to her account from Saudi Arabia – and she could keep half. Records however showed this was a year’s scholarship meant for a poor minority student staying in a hostel in Ranchi, about 100 km away.

In some other cases, the religion of a person was changed in the records in order to avail the scholarship meant for minority students.

The report has unearthed many such instances where either details of bogus beneficiaries were registered or actual beneficiaries did not receive the amount in across six districts – Ranchi, Dhanbad, Latehar, Ramgarh, Lohardaga and Sahibganj.

Systemic ailment?

The revelation in this case is not the only such instance of siphoning of scholarship funds, even when they were transferred through the Direct Benefit Transfer route, which has been endorsed by the authorities as a leak-proof system.

In 2017, a similar scam was reported, which dealt with funds for Scheduled Caste students in Bihar.

Speaking to The Indian Express about the current scam, economist Jean Dreze termed it as “yet another illustration of the vulnerabilities of the Aadhaar-enabled payment system.”

“Poor people are regularly robbed of their wages, pensions and scholarships by corrupt business and banking correspondents who take their fingerprint on one pretext or another,” Dreze said. “We have been trying for years to alert the Reserve Bank of India, the National Payments Corporation of India and others to these vulnerabilities but they seem to prefer not to know.”

Warnings were also issued by the Centre on the matter, but to no avail. In July 2019, the Centre had written to the then Jharkhand Chief Secretary warning of “repeated attempts to subvert” the National Scholarship Portal, according to report by The Indian Express.

Meanwhile, the verification process for this year’s scholarship has been stopped till the inquiry is complete, current Chief Secretary Sukhdev Singh told the newspaper.