Date: 20/10/2022

Relevance: GS- 2: Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes.

Key phrases: Direct Benefit Transfer, International Monetary Fund, World Bank Group, Welfare schemes, Beneficiaries' bank accounts, Aadhaar number, Transparency, Duplication, Financial inclusion programme, PM Awas Yojana, LPG Pahal scheme, Financial literacy, Robust grievance redressal.

Why in News?

• An enabling policy regime, proactive government initiatives and supportive regulatory administration allowed the private and public sector entities in the financial sector to overcome longstanding challenges of exclusion of a large part of the population.

Context:

• Last week, the International Monetary Fund (IMF) lauded India’s Direct Benefit Transfer (DBT) Scheme as a “logistical marvel” that has reached hundreds of millions of people and specifically benefitted women, the elderly and farmers.
• Earlier this month, David Malpass, President of the World Bank Group, had also urged other nations to adopt India’s move of targeted cash transfer instead of broad subsidies noting that “India managed to provide food or cash support to a remarkable 85 per cent of rural households and 69 per cent of urban households”.

Direct Benefit Transfer

• In January 2013, The Government of India, introduced the Direct Benefit Transfer or DBT scheme to streamline the transfer of government-provided subsidies in India.
• The Government introduced the scheme with the objective of improving the delivery system and redesigning the existing procedures in welfare schemes.
• DBT aims to transfer subsidy benefits from various Indian welfare schemes directly into the beneficiaries' bank accounts.
• To avail of the DBT benefits, beneficiaries must ensure they link their bank account to their Aadhaar number.
• Since the inception of the DBT scheme, the Government has launched 450 projects and reached over 900 million people.

Advantages of Direct Benefit Transfer

• DBT transfers help expedite the flow of funds and information securely while reducing the possibility of fraud.
• It eliminates the need for intermediaries, including government officers, in transferring the subsidy amount directly into the beneficiary accounts.
• It brings about transparency and reduces instances of pilferage from the distribution of Central Government-sponsored funds.
• DBT ensures accurate targeting of beneficiaries.
• Beneficiaries can link only one bank by seeding the fund deposits to their Aadhaar details to avoid duplication of subsidies.
• It enables the Government to simultaneously reach out to both citizens and beneficiaries of the scheme.

Types of Schemes Covered in Direct Benefit Transfer:

• Cash Transfer
  • Under the cash transfer scheme of Direct Benefit Transfer, the Government directly transfers the money to the individual beneficiaries.
• In-Kind benefit transfer
  • In-kind benefit transfer is a scheme of Direct Benefit Transfer where the Government offers benefits to the beneficiaries in kind either directly or through their implementing agencies.
  • Here, the Government incurs the expense of procuring a subsidy or benefit. For instance, the Government will buy a particular product, say food grains and offer it for public distribution.
• Other transfers
  • Other than cash and kind transfers, the Direct Benefits Transfer scheme also transfers funds and subsidies to several non -governmental functionaries that help implement government policies until the very end. This includes community workers, NGOs, teachers in aided schools, etc. They are not beneficiaries but are given training, wages, and incentives to serve the beneficiaries.

How Direct Benefit Transfer scheme has transformed social welfare in India?

• It evolved the Public Finance Management System and created the Aadhaar Payment Bridge to enable instant money transfers from the government to people’s bank accounts.
• The Aadhaar-enabled Payment System and Unified Payment Interface further expanded interoperability and private-sector participation. This approach not only allowed all rural and urban households to be uniquely linked under varied government schemes for receiving subsidies directly into their bank accounts but also transferred money with ease.
• By 2022, more than 135 crore Aadhaars have been generated, there are 47 crore beneficiaries under Pradhan Mantri Jan Dhan Yojana, 6.5 lakh Bank Mitras delivering branchless banking services and mobile subscribers number more than 120 crore.
• Riding on this network, the DBT programme has reached commanding heights towards achieving the government’s vision of “sabka vikas”. Becoming the major plank of the government’s agenda of inclusive growth, it has 318 schemes of 53 central ministries spanning across sectors, welfare goals and the vast geography of the country.
• The DBT scheme that began as a pilot in 2013-14 could not have achieved the size and scale it has today without the government’s financial inclusion programme, which helped plug leakages in welfare schemes, weed out fake or ghost beneficiaries and transfer funds to genuine beneficiaries. This ensured significant savings to the exchequer and enabled efficient utilisation of government funds.
• In rural Bharat, DBT has allowed the government to provide financial assistance effectively and transparently to farmers with lower transaction costs – be it for fertilisers or any of the other schemes including the PM Kisan Samman Nidhi, PM Fasal Bima Yojana, and PM Krishi Sinchayi Yojana — thus becoming the backbone for supporting the growth of the agricultural economy.
• In urban India, the PM Awas Yojana and LPG Pahal scheme successfully use DBT to transfer funds to eligible beneficiaries.
• Various scholarship schemes and the National Social Assistance Programme use the DBT architecture to provide social security.
• DBT under rehabilitation programmes such as the Self Employment Scheme for Rehabilitation of Manual Scavengers opens new frontiers that enable social mobility of all sections of society.
• The efficacy and robustness of the DBT network were witnessed during the pandemic. It aided the government to reach the last mile and support the most deprived in bearing the brunt of the lockdown.
• From free rations to nearly 80 crore people under the Pradhan Mantri Garib Kalyan Yojana, fund transfers to all women Jan Dhan account holders and support to small vendors under PM-SVANidhi, DBT helped the vulnerable to withstand the shock of the pandemic.

Way Forward:

• Going forward, the DBT approach is expected to expand further in size and structure as it continues to be the major tool of the government for a more nuanced and targeted intervention towards improving the ease of living.
• However, digital and financial literacy, robust grievance redressal, enhancing awareness and an empowering innovation system are some of the aspects that would require continued focus. This would play a vital role for India in meeting the diverse needs of its population and ensuring balanced, equitable and inclusive growth.

Source: Indian Express

Mains Question:

Q. How Direct Benefit Transfer scheme has transformed social welfare in India. Suggest measures to further strengthen DBT approach in India.