Direct Benefit Transfer

Direct benefit transfer is one of those monumental topics which have successfully incited ardent discourse in recent times. Many significant government policies have stumbled to get themselves implemented from time to time due to rampant corruption and unsolicited intervention of middlemen.
The Indian government came up with the direct benefit transfer scheme to resolve this predicament. On 1st January 2013, the government intended to bring a change in the system of transferring subsidies directly to the people through their bank accounts. This newly launched mechanism was highly expected to have reduced leakages, delays etc. On 1st June 2013, the scheme Direct Benefit Transfer for LPG (DBTL) launched formally by the Minister of Petroleum and Natural Gas in 20 AADHAAR coverage districts.
Genesis of DBT
The mechanism of DBT has its origin in Brasilia, Brazil in mid-1980. It was used in many Latin American countries as a ‘poverty reduction measure’. In Brazil, this mechanism known as ‘Fome Zero Program’ gained its utmost popularity. In this scheme, families whose income was less than a predetermined income line as per ‘the federal government’s unified social service register’, used to get money directly through their bank accounts, although Brazil launched this cash transfer in order to address some specific issues. This program, affiliated to scheme called ‘Bolsa Familia’ in 2004, paved a new way towards reducing poverty and inequality in Brazil. India also embraced this idea of direct benefit transfer program directly from Brazil.
The huge success rate of this program attracted many other countries like United States, Mexico, some other American Republic and south-east Asian nations including Latin American nations to utilize this scheme in the form of ‘Conditional Cash Transfer’(CCT).The Bolsa Familia program is deemed to be the largest and most successful CCT program. CCTs have been proven to be effective enough to shatter the vicious circle of poverty to a great extent establishing social equity and human capital enhancement. This mechanism has successfully fetched structural stability in the society. This innovative mechanism has yielded momentous success which is prominent in the statistics that the number of the beneficiaries takes a leap from 38 million in 2001 to 129 million in 2011. Besides 18 Latin America and Caribbean countries, this scheme has shown its excellence in some south-Asian countries like Bangladesh, Pakistan, Indonesia.
Benefits Of DBT
DBT aims to transfer subsidies, welfare benefits and scholarships directly to the people through their bank accounts. The direct benefit transfer has ushered in a handful of benefits. It successfully added impetus to the implementation of government schemes by preventing leakage and delays. Leakages were reduced as middlemen were eliminated, which has in turn helped the Indian economy as structural expenditure has been removed. Also, fake and duplicate beneficiaries were eliminated based on biometric identification by Aadhaar Card verification. The DBT scheme also removes delays in transferring money by allowing time-bound transfers. The recognition of actual beneficiaries and time bound transfer of benefits has brought transparency in distribution of benefits.
DBT has also contributed to the growth of economy. As the DBT scheme has opened a new way to transfer money directly to the bank accounts which is in a way is injecting liquidity to the economy leading to at least 0.5% growth in GDP. People in rural areas are also able to avail the facilities of the financial institutions with cash in their hands and have the ability to spend it according to their need.
The Jam Trinity
The JAM trinity represents JAN DHAN Yojana, AADHAAR and mobile number, plays a significant role in implementing the direct subsidy transfer to the poor- one of the biggest reforms in independent India. Previously subsidy schemes used to reach the poor of our country through various indirect ways. Those procedures were not only time consuming and complicated but also involved corruptions, extortions and intermediaries depriving the poor in availing the benefits. But the advent of JAM trinity has made the procedure much easier and fair. AADHAAR helps to sort out the disadvantaged citizens through direct biometric identification, while direct transfer of funds to the bank accounts has been availed with the help of JAN DHAN bank accounts and mobile phones. It has made it possible to yield its benefits only to the intended beneficiaries keeping aside the well-to-do families and intermediaries.
Different Types of Subsidies
When the government tends to provide an advantage to a group or an individual in the form of cash which is transferred directly to the bank accounts of the people-it is called subsidy. The prime motive of subsidy is to lessen the financial burden of the poor people and encourage them to avail every facility the government as it provides to establish a stable social and economic structure.
The government started providing subsidy for LPG, one of the most significant needs of daily life, from the year 2015. This scheme was launched with two dimensions in mind. The prime motif was to provide LPG connection to those families who belong to the below poverty line. As the financial constraints did not allow them to avail the facilities of LPG connection, the government decided to bear the expenditure to some extent by sending cash directly to the bank accounts. Another important aspect was to encourage people to surrender the subsidy as they can afford those expenses on their own. And if those surrendered subsidies are redistributed to the poor, it will help lessen the daily life constraints to some extent. This special facility was provided through the scheme Pradhan Mantri Ujjwala Yojna which was launched in 2016. This scheme was supposed to protect the health of women reducing the severe health hazards associated with unclean cooking fuels. It targeted eliminating acute respiratory ailment by indoor air pollution.
Rural India still uses kerosene as common lighting source and as cooking fuel despite its adverse effects. The government pays subsidy on kerosene which is Rs 4.39 per liter according to the latest source. But in case of kerosene, subsidy is not paid through bank accounts. Public Distribution System (PDS) is used to distribute kerosene among the beneficiaries at a subsidized rate. Moreover, through the PDS the government provides daily life household ingredients like rice, pulse, flour at subsidized prices to lessen the burden of expenditure on the poor.
The facility of subsidy is also provided in case of electricity consumption. But this advantage is not applicable in all over India. Some states and UTs like Haryana, Delhi have decided to sanction electricity consumption up to 200 units every month. Apart from electricity, the government decided to provide subsidy on fertilizer on March, 2017. The Standing Committee on Chemicals and Fertilizers chaired by MS. K. Kanimozhi intends to provide subsidy to manufacturers and importers with the objective to yield fertilizer to the farmers in affordable price.
All responsibility of implementing DBT programs was initially given to the Planning Commission that acted as the nodal point. But later, the Department of Expenditure took over all the responsibility in July 2013 and continued to function till September 2015. Then the authority of DBT and matters related to it was transferred to the Cabinet Secretariat which added more impetus to the scheme. This scheme has gradually expanded its purview of work by giving more emphasis on scholarships, women, child and labour welfare. A significant progress has been marked in recent times when seven new scholarship schemes and Mahatma Gandhi Rural Employment Guarantee Act (MGNREGA) were brought under the purview of DBT in 300 identified districts with higher AADHAAR enrollment.
Although Direct Benefit Transfer has attained enormous success still there are some existing lacunae which are required to be scrutinized properly. A person must have a bank account to avail the facility of DBT whereas many people living in rural and tribal areas are unaware of banking system. Many people are deprived of all those facilities of government schemes as illiteracy has left them vulnerable. It is obvious that having a bank account does not means that banking facilities will be availed. Another big problem is to find out deserving beneficiaries as only 3% Indians pay income tax. This extreme inclination of evading income tax deters the process of determining those citizens who actually need the government subsidy. It is also necessary to maintain a proper vigilance on how the money is spent otherwise money given by government can be used in unhealthy ways. Moreover, in rural areas men are the head of the families and is a disadvantage to women who hardly get their share of the cash. Besides, in this system of DBT all money transaction are done through micro ATMs which are not always present at the door steps of every beneficiaries who need to travel long to withdraw their money. Another vulnerability of this program is that it uses data using AADHAAR which may lead towards the violation of privacy of a citizen.
This program of DBT is an excellent initiative of government to reach out to every nook and corner of our country. It is an evolving project which presents its own concerns and prospects. It deserves a unanimous support so that it can successfully broaden its ambit more and work more purportedly to elevate the downtrodden and vulnerable section of the society which would lead towards social stability. The DBT, during the pandemic has proven itself as an efficient tool to the government to provide benefits to the people who were without any income.

To see video and download pdf, visit:

Post a comment