Thousands of impoverished families from 12 Indian states converged in the capital, Delhi, on Thursday, to protest against a controversial cash transfer program.

Under the terms of the scheme introduced buying food, fuel and fertilizer at discounted rates from a government shop, Indians in possession of scheme identity cards are supposed to be paid cash by the government to buy goods at market prices.

Proponents of the system claim it will improve efficiency and reduce large-scale corruption.

But there are those who claim the scheme, which has yet to be rolled out across much of the country, causes more problems than it solves.

In the state of Rajasthan, many listed for the scheme have seen no money so far. Prabha Devi, 54, a frail-looking woman from Rajasthan's Alwar district, said she had received nothing for a year as part of the government's cash transfer scheme for buying kerosene to cook.

"We were told that poor families would get money in our accounts rather than get kerosene at subsidized rates. But nine months on, no money has come to my bank account. What do I do?" she said.

Banking up problems

Prabha is back to cooking with firewood because she can no longer afford kerosene. Thousands of families like Prabha's face similar problems complaining they either received no money for one year, or at best just one of four installments.

Om Prakash, a construction laborer, has a different problem.

"I tried three times to get my account open. The bank refused to help," Prakash told DW, adding that he had missed out on work as a result of the inconvenience.

The government has labeled the direct cash transfer of subsidies as a political game changer. It hopes to roll out the scheme in 51 of India's 659 districts from January 2013, to be gradually extended to the rest of the country by April 2014.

Instead, Thursday's protesters want a National Food Security Bill enacted that would provide foodstuffs and other basics directly to those in need.

The demonstration was organized by the Right to Food Campaign (RFC), a network of grassroots organizations spread across the country.

"This protest will make hunger visible. We want to showcase to the government the poor who are unfairly excluded from government food security programmes such as the public distribution scheme and pensions," Kavita Srivastava, national convener of the RFC told DW.

'Grain needed, not bureacracy'

The RFC is demanding the implementation of the National Food Security Bill currently pending in Parliament. This ambitious scheme proposes to universalize the public distribution system, provide oil and pulses apart from food grains and adequate amounts of maternity entitlements and pensions for the elderly.

Many of those gathered at a venue near parliament said they preferred food grains to cash transfers into bank accounts, with bureaucracy a big problem.

"The non-proximity of banks, poor education and paperwork are deterring genuine beneficiaries like us from availing government subsidies," Jagan Das, a farmer from the central state of Chhattisgarh told DW.

"The present distribution scheme may have its faults because of pilferage... but we manage to get our rations after a fight. At least we are not exposed to food insecurity," Malthi Jolri, a housewife said.

Fears of cartel price inflation

Those campaigning against an extension of the cash transfer scheme have even described it as "genocidal" as it would deprive large numbers of the poor of their daily bread.

"There are concerns about how the cash transfer would factor in inflation but a bigger fear is about cartelization in rural areas when ration shops are closed. Traders then can come together to artificially inflate food prices," said Usha Ramanathan, an expert on law and poverty.

For now, the government still remains firm with its rollout of cash transfers. It is proposed that the cash equivalent of all subsidies such as kerosene, cooking gas, food, fertilizer, scholarships and old-age pensions will eventually be transferred directly to bank accounts of all genuine recipients.

Currently the government provides 3.2 trillion Indian rupees (57.7 billion US dollars) in subsidies every year.