Ramesh described the policy initiative as "aap ka paisa, aap ke haath", aimed at ensuring the right of the poor was delivered to them at their door-step.
The cash amount would be transferred to the beneficiaries' bank accounts linked to their Aadhaar cards.
The poor in the villages, who would not be able to go to a bank branch, would be able to get cash through an expanded network of banking correspondents, said Ramesh.
Chidambaram said the government would start with scholarships and old-age pension schemes and cover other welfare plans including various subsidies.
However, he clarified that "complex" issues like food, fertiliser and cooking gas cylinder subsidies would be taken up later only when the government is more confident and the bottlenecks in the implementation of food and fertiliser subsidies are addressed.
"We are prudent, we don't want to stumble and fall," he said.
The scheme is expected to cut down leakages and corruption in the implementation of various social sector schemes and distribution of subsidised items.
The cash transfers scheme is expected to reap rich electoral dividends in the same manner the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) worked for the UPA-I.
