DBT: Solution or economic burden?

Context: India’s economic inequalities and pervasive poverty have long
underscored the systemic inefficiencies in the conventional welfare system.
Traditional subsidy mechanisms, though intended to bridge socioeconomic
divides, have instead been bogged down under the weight of bureaucratic
hurdles, rent-seeking behaviour and fragmented distribution channels. In
response to these flaws, the Government of India launched the Direct Benefit
Transfer (DBT) scheme in 2013 as an ambitious remedy. It aims to eliminate
intermediaries and inaugurate a new era of precision and transparency. Since
2014, this initiative has expanded nationwide, revolutionizing the subsidy
framework and signalling a decisive shift from outdated systems.

Direct Benefit Transfer scheme

·       About: Government of
India launched the Direct Benefit Transfer (DBT) Program on 1st Jan 2013. With
DBT program, GoI aims to make payments directly into the Aadhaar-linked bank
accounts of the end beneficiaries, removing any malpractices from the existing
system such as diversions and duplicate payments. The primary objective of the
DBT program is to bring transparency and terminate pilferage from distribution
of funds sponsored by Central Government.

·       DBT
Process: The following are the steps or sub-sections, which are the major
checkpoints in the Direct Benefit Transfer process, Public Financial Management
System (PFMS) registration. Examination of eligibility of the beneficiary. Verification
of the beneficiaries' bank account/ Aadhar Enabled bank account. Initiation of
the payment. PFMS (Public Financial Management System) is a Central Plan Monitoring
System of the Ministry of Finance, Government of India. It is used as a common
platform to carry out both Aadhar and non-Aadhar e-payments for the DBT
program.

·       Achievements
of the DBT Program: The first payment was made to a mother in the
Puducherry for the Janani Suraksha Yojana in January 2013. The benefits include
accurate targeting of the beneficiaries, de-duplication and reduction of fraud.

·       Components
of Direct Benefit Transfer: Direct Benefit Transfer (DBT) comprises
several crucial components that ensure its effective implementation.

Beneficiary
Account Validation System - One key element is the Beneficiary Account
Validation System, which validates beneficiary accounts to ensure accurate and
timely transfer of benefits.

Payment and
Reconciliation Platform - Additionally, Direct Benefit Transfer relies on a
robust Payment and Reconciliation Platform, which is integrated with the
Reserve Bank of India (RBI), the National Payments Corporation of India (NPCI),
and various public and private sector banks.

·       Impact
of Direct Benefit Transfer: Reduction in Administrative Costs - Implementing
DBT has caused a reduction in administrative charges related to subsidy
distribution.

Targeting of
Beneficiaries - DBT allows for more specific targeting of beneficiaries primarily based
on criteria together with earnings stage, demographic profile, and social fame.

·       Challenges
of Direct Benefit Transfer (DBT): Aadhaar Authentication
Issues - Issues such as wrong Aadhaar statistics, duplicates, or
authentication issues can cause delays or errors in subsidy disbursal.

Lack of
Awareness - This can bring about low enrolment rates, resistance to digital
transactions, and problems in gaining access to schemes, especially among
marginalised communities.

·       Way
Forward: Enhanced Outreach and Awareness Campaigns - Governments should
conduct big awareness campaigns to educate beneficiaries about the blessings of
DBT, the enrolment system, and the usage of virtual charge methods.

Investment in
Digital Infrastructure - Governments want to invest in enhancing digital
infrastructure, which include banking centres, internet connectivity, and power
delivery, specifically in rural and far-flung areas.