New Delhi, Jul 5 (IANS): To plug leakages in the subsidy system, the government will soon provide cash through banks and ATMs directly to the beneficiaries in lieu of subsidies on kerosene, cooking gas and fertiliser.

"Direct transfer of subsidies on liquified petroleum gas (LPG), fertiliser and kerosene will help in curbing pilferage and leakages," Finance Minister Pranab Mukherjee said Tuesday after receiving a report on direct subsidies.

A committee headed by the Unique Identification Authority of India (UIDAI) Chairman Nandan Nilekani has suggested that the poor should be given subsidies directly. The money can be transferred to the beneficiaries' bank accounts.

The committee has suggested that automated teller machine (ATMs) and mobile banking could also be used for providing cash subsidies to the beneficiaries.

The task force, constituted by the finance minister in February, Tuesday submitted a comprehensive 70-page report suggesting that the direct subsidy scheme should be launched on a pilot basis.

Talking to reporters, the finance minister said the scheme would be launched on a pilot project basis and the final decision will be taken after six months.

"The pilot project will take around six months. Taking into account the experience from the pilot project they will submit the final report by the end of this year," Mukherjee said.

The task force has suggested that the pilot project be implemented in seven states - Maharashtra, Haryana, Rajasthan, Orissa, Assam, Tamil Nadu and the National Capital Territory of Delhi.

In its interim report, the task force has also recommended setting up a core subsidy management platform as part of the proposed solution architecture that automates all business processes related to direct subsidy transfer.

The core subsidy management system would maintain book-keeping information on entitlements and subsidies for all beneficiaries. It will also provide increased transparency in the movement of goods, levels of stocks, prediction and aggregation of demand, and identification of beneficiaries.

The task force has also recommended providing choice of banks to beneficiaries, along with an interoperable network of Business Correspondents for convenient access to subsidy funds.