# A 28-year-old homemaker in Giridih, a Ranchi couple in their 30s, the 47-year-old wife of a tailor in Lohardaga receive, in their bank accounts, funds of a Central government scholarship meant for pre-matric minority students. All of them say they are unaware of this.
# Several students across at least six districts in Jharkhand have had their Aadhaar cards and fingerprints taken, and scholarships disbursed in their names, but many have received only a fraction of the amount — if at all anything.
# In Dhanbad, the Indira Gandhi Memorial High School has three rooms, 80 students and no hostel. But according to the official portal, scholarships have been disbursed to 323 hostel students for 2019-20.
# In Lohardaga, Rajiya Khatun, whose husband is a tailor, was asked to give her Aadhaar number, bank details and fingerprints, and told that Rs 10,700 was coming to her account from Saudi Arabia — and she could keep half. But records showed this was a year’s scholarship meant for a poor minority student staying in a hostel in Ranchi, about 100 km away.
This goes on and on — across Jharkhand. A nexus of brokers, bank correspondents, school staff and state government employees have allegedly colluded to dupe poor students and their families of a pre-matric Centrally funded scholarship, an investigation by The Indian Express has revealed.
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This newspaper tracked down schools across Ranchi, Dhanbad, Latehar, Ramgarh, Lohardaga and Sahibganj; interviewed several students, their families, school staff and officials of the Jharkhand State Minorities Finance and Development Corporation (JSMFDC), the nodal agency for disbursing this scholarship.
The Indian Express also cross-checked data on the National Scholarship Portal (NSP) with beneficiary bank accounts recorded in the Public Finance Management System (PFMS) to find how a direct benefit transfer scheme, meant to cut corruption, was being derailed by it.
Beginning today, a series of reports will highlight glaring cases of fraud and how established processes were subverted — and by whom.
In 2019-20, the Ministry of Minority Affairs disbursed Rs 61 crore under this scheme, from Rs 1,400 crore nationally, to Jharkhand. Given that the state government is a JMM-Congress-RJD alliance, this scholarship is of political significance as well since it was launched by the UPA Government in 2008.
The Pre-Matric Scholarship Scheme is meant to help students of minority communities, Muslims, Christians, Sikhs, Parsis, Jains and Buddhists, from families with annual income below Rs 1 lakh. To be eligible, students need to score at least 50 per cent in their class exams. Students from Class 1 to 5 receive Rs 1,000 per year and students of Class 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. Most of the corruption is related to these last two categories.
Given that the scholarship is, in itself, a relatively small amount, the racket was designed to lure as many students as it could. For example, The Indian Express found examples where the entire school was defrauded.
For instance, authorities at Madrasa Alia Arabia in Ranchi said all the 102 students listed as hostel beneficiaries in the NSP for 2019 were “fake”. Mohammad Sahabuddin, the head teacher, said the list also included girls, although the madrasa is a residential facility for boys. “If you multiply Rs 10,700 by 102, the amount that has been illegally siphoned off without our knowledge is nearly Rs 11 lakh,” he says.
This assumes significance given that the scholarship, experts said, has helped in the steady increase in minority enrolment in Classes IX and X, from 8.7 per cent in 2014-15 to 12 per cent in 2017 for which latest numbers are available. In Jharkhand, where minorities form about 19 per cent of the population, the amount disbursed has gone up from just Rs 9.46 crore in 2014-15 to Rs 34.61 crore in 2018-19 and to Rs 61 crore this year. Over 2 lakh students applied last year and more than 84,000 got the scholarship this year.
At the heart of the corruption lies the process of verification. Students have to submit their applications through the school between August and November. The schools appoint nodal officers to register on the scholarship portal on their behalf and verify the applications. The applications also need to be verified at the district and state level. Once the applications are cleared, the scholarship amount is disbursed usually in April or May — fresh applications have to be filed every year.
But clearly in Jharkhand, this process failed at many levels.
Ironically, as early as July last year, Secretary, Union Ministry of Minority Affairs, had written to the then Jharkhand Chief Secretary D K Tiwary, warning that there were “repeated attempts to subvert” the NSP, especially at the verification stage of the applications.
“After brainstorming and discussions, it has been agreed…that the verifying authorities (Schools, colleges, institutes, district nodal officer, State nodal officers) are the most critical stakeholders who ensure integrity of the verification process,” the letter said.
This warning, evidently, went unheeded.
“This scam is yet another illustration of the vulnerabilities of the Aadhaar-enabled payment system,” said economist Jean Dreze, whose food security team also received complaints from some students that they were not getting their full scholarships.
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“Poor people are regularly robbed of their wages, pensions and scholarships by corrupt business/banking correspondents who take their fingerprint on one pretext or another. 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,” Dreze said.
In this case, however, the system knew — there were written warnings from the Centre and the state and yet few did anything. Ironically, over the last few weeks, as The Indian Express went from school to school, checking records and asking them questions on the scholarships disbursed fraudulently, most school owners or principals said they were unaware. Days later, at least three schools sent official notes to their respective District Superintendent of Education asking for “necessary quick action towards the scholarship scandal”.
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Jharkhand Chief Secretary Sukhdev Singh told The Indian Express that the state government “will look into the matter on the basis of inputs made available”.
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