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Direct Benefit Transfer

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The Direct Benefit Transmission (DBT) scheme was implemented by the Indian government on January 1, 2013, to simplify the transfer of government-provided subsidies in India. With the intention of enhancing the delivery system and reforming the current welfare plan processes, the government introduced the program. DBT intends to deposit subsidy payments from different Indian welfare schemes directly into the bank accounts of the recipients. Beneficiaries must link their bank account to their Aadhaar number in order to receive the DBT benefits. The DBT Mission was initially created at the Planning Commission to serve as the focal point for carrying out the DBT programs. The DBT mission was, however, taken up by the Department of Expenditure from July 2013 to September 14, 2015. As of September 14, 2015, the Coordination & PG Secretary in the Cabinet Secretariat is now responsible for matters pertaining to the DBT Mission. The DBT scheme helps the government in making direct deposits of subsidies into the accounts of recipients. Previously, the benefits were given to an administrative entity first, which would subsequently give them to the beneficiaries. The DBT practice does away with the intermediary, though. The government makes the payment directly to the beneficiary. These transfers include, for example, grants and sponsorship. People who use the DBT scheme can get benefits by using a savings account. So money can be protected in a savings account while still collecting interest. The DBT Bharat Portal now hosts 313 Central Sector (CS) and Centrally Sponsored Schemes (CSS) from 53 Ministries.

Objectives of the Direct Benefit Transmission Scheme:

The program’s goal is to transfer subsidies and cash benefits to individuals directly through their Aadhaar-seed bank accounts in the hopes that doing so would significantly reduce leakages and the associated delays caused by the flow of money through multiple administrative offices before it reaches the intended recipient.

  • Reducing theft and duplication.
  • Targeting the beneficiary with precision.
  • Lessening of payment delays.
  • Electronic benefit transfers that reduce the number of layers engaged in benefit flow

Advantages of the Direct Benefit Transmission Scheme:

  • Due to the direct transmission of subsidies and benefits from social programs, this method does away with middlemen and rent for “fair pricing stores.” As a result of lower structural spending, this will benefit the Indian economy over time.
  • There will be healthy rivalry between the market’s sellers because everyone can buy things at market prices. There will be no longer be a problem with middlemen diverting subsidized crops to markets.
  • It encourages individuals to open bank accounts.
  • It is possible to solve the issue of food grain storage and process spoiling.
  • Money will circulate more widely, which may cause the GDP to rise significantly.
  • It will assist India in transitioning to a cashless economy.
  • The use of middlemen will end. Leakages will be lessened as a result.
  • False and duplicate beneficiaries will no longer exist because the Aadhaar card is based on bio-metric identity.
  • The DBT plan enables time-bound transfers, which eliminates money transfer delays, one of the greatest issues that recipients encounter.

Disadvantages of The Direct Benefit Transmission Scheme:

  • There are still numerous rural and tribal regions that lack banking facilities and access to roads.
  • Only 3% of Indians currently pay income taxes. As a result, it is still impossible to determine the income of the remaining citizens, which makes it tough to determine who deserves to get benefits.
  • To enroll beneficiaries in rural areas, the majority of banks appoint Business Correspondents. For financial incentive, they could create multiple accounts for each beneficiary. Numerous complaints have also been made about the recipients not receiving passbooks, which has led to their ignorance of the program. Beneficiaries who lack literacy are more at risk in this situation.
  • Direct cash has the potential to be misused and may not be used for intended purposes. On instance, since the majority of beneficiaries’ households are headed by men, income may be used for smoking and drinking instead of food subsidies.
  • Since there are few micro ATMs, which were designed to give cash benefits at doorsteps, many beneficiaries must travel far to withdraw money.
  • Men make up the majority of family heads who receive benefits. Women will suffer since there is no assurance that they will receive their fair portion of the money.

Direct Benefit Transmission is Seeded in Major Central Schemes:

Mahatma Gandhi National Rural Employment Guarantee Act (Mahatma Gandhi NREGA):

MGNREGA is a demand-driven wage employment program that seeks to increase the livelihood stability of rural households by offering at least one hundred days of guaranteed wage employment to each household whose adult members volunteer to perform unskilled manual labor throughout each fiscal year. Electronic Cash Management System (eFMS) was implemented in 2016 to improve the fund flow system and guarantee timely wage payments. Through this, the Central Government’s Direct Benefit Transfer system credits recipients of the Mahatma Gandhi NREGA’s earnings directly to their bank or post office accounts.

LPG Direct Benefit Transfer:

“Pratyaksh Hanstantrit Labh” – PAHAL Scheme was first implemented in 291 districts across the nation on June 1, 2013, over the course of six phases.  The government thoroughly examined the program and made significant changes to the program before its introduction after looking into the consumer’s challenges. On November 15, 2014, the redesigned program was reintroduced in 54 districts.

PM Kisan Samman Nidhi (PM-KISAN):

The Pradhan Mantri Kisan Samman Nidhi (PM- KISAN) Scheme is a Central Sector Direct Benefit Transfer (DBT) Scheme that provides financial assistance of Rs. 6000/- per annul to all landholding farmer families throughout the country, subject to certain exclusion criteria relating to higher income strata, to help them meet domestic needs and expenses related to agriculture and allied activities. The money is deposited directly into the bank accounts of the beneficiary farmers, who have been recognized by the State/UT Governments, in three payments of Rs. 2000 each, spaced out over a four-month period. Beneficiaries’ Aadhaar-seed data is used to make payments.

Pradhan Mantri Matru Vandana Yojana:

In order to support the goals of encouraging improved health seeking behavior among pregnant women and lactating mothers, the Pradhan Mantri Matru Vandana Yojana (PMMVY) Scheme enables participants to access the scheme benefits through Direct Benefit Transfer (DBT). In compliance with the National Food Security Act of 2013, the Maternity Benefit Program has been implemented throughout the nation’s districts.

Pradhan Mantri Gramin Awas Yojana (PMAY-G):

In order to provide housing for India’s rural poor, the Indian government established this social assistance initiative. Housing for All by 2022 is a similar program for urban poor people that was introduced in 2015. The government would provide financial support to the recipients of the PMGAY program in the amount of up to 1.2 lakh rupees for the construction of homes in rural regions and 12,000 rupees for the construction of toilets. Additionally, they are qualified to borrow 70,000.

Direct Benefit Transmission Process:

The key Direct Benefit Transfer procedure checkpoints are the following steps or subsections:

  1. Registration for the Public Financial Management System (PFMS).
  2. The beneficiary’s eligibility is examined.
  3. Inspection of the beneficiaries’ bank accounts or accounts with Aadhaar integration.
  4. The commencement of the payment

Challenges of Direct Benefit Transmission Scheme:

  • Currently, 91% of the population has registered for an Aadhaar card. Since DBT and Aadhaar are linked for programs, Aadhaar connection must be improved to 100% so that no one may be excluded.
  • One of the biggest obstacles to applying this method is the low level of digital literacy in rural areas.
  • The 81% financial inclusion rate in India could exclude persons from rural backgrounds. People won’t be able to use facilities if there are no banking services available. PM-Jan Dhan Yojna will be crucial in this situation.
  • Reaching those without bank accounts presents many difficulties for bank correspondents. Technical and connectivity issues are sometimes a challenge for banking correspondents. To benefit everyone, banking services in rural areas need to be enhanced.

Achievements of Direct Benefit Transmission Scheme:

  • Since 2013, more than Rs 24.8 lakh crore has been transferred through the DBT method.
  • 6.3 lakh crore will be spent just in FY 2021–22; the daily average DBT payment processing is around 90 lakh (in FY 2021-22).
  • Over 10 crore beneficiaries received a direct bank deposit of about Rs 20,000 crore under the PM Kisan Samman Nidhi Yojana’s 11th installment (more than 10 crore transactions at the click of a button on a single day).
  • More than 8,840 crore digital payment transactions were made during 2021–2022 and around 3,300 crores during FY 2022–2023 (up until July 24, 2022); on average, 28.4 crore digital transactions are made each day.

Note: Aadhaar’s role in the Direct Benefit Transfer Scheme:

The government’s connection of the Aadhaar number to the DBT scheme is one of its most significant accomplishments. The primary reason for attaching the Aadhaar number is so that the government can use it to issue various types of payments. Additionally, it aids in ensuring that the payment is sent directly to the beneficiary’s account and that the correct beneficiary receives it. Additionally, the government recently declared that anyone with annual income of more than Rs. 10 lakh will not be eligible for LPG subsidies.

Conclusion:

The Direct Benefit Transfer scheme has decreased the number of violations and delays related to subsidies. Due to the funding being distributed through various routes and processes, several problems developed. To ensure that monies for social activities flow more quickly and accurately, the Indian government redesigned the outdated system. The transfer of funds from the government of India’s treasury to recipients’ bank accounts is direct. Both the Indian people and the government benefit from the system’s increased effectiveness and efficiency. Therefore, different industries in a diversified country like India have a variety of goals and obstacles. Due to its scalability and dependability, the DBT mechanism can play a significant role in this situation by addressing the aims and problems unique to the sector and ensuring good governance for all. The positives of DBT, however, outweigh its drawbacks by a wide margin. It might be a game changer for better governance in the nation if the government and RBI carefully plan their approach.



Last Updated : 22 Nov, 2022
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