Direct Benefits Transfer : Elimination of Middlemen Scheme

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DBT( Direct Benefits Transfer)

Direct Benefits Transfer(DBT) is an attempt to improve the mechanism of transferring subsides launched by GOI in 2013.

This aims to transfer subsidies( for kerosene, LPG, Fertilizers, etc) directly to the people living below the poverty line through bank accounts using the Aadhaar payment bridge.

A task force headed by Nandan Nilekani has recommended the modalities of operationalizing Direct Cash Transfer for these items.

How Does Direct Benefits Transfer Scheme Work?

The money is transferred directly to the bank accounts of the beneficiaries with Aadhaar cards. Payments and benefits under the government welfare programs will be paid directly to the beneficiaries. That money can be used by beneficiary by spending in the online market.


DBT a s a Game Changer

1) DBT is aimed at cutting the bloated subsidy bill of Rs. 1,64,000 crore, hence reduce fiscal deficit.

2) As a Fiscal Game changer:

a. Eliminate middlemen in various government sponsored welfare schemes and subsidized food, fuel and fertilizer schemes.

b. Curb division of subsidized cylinders for commercial use and diesel adulteration with inexpensive kerosene.

3) Timely and quick transfer to intended beneficiaries.

4) Simple and error free as the money is deposited directly into the beneficiaries accounts.

5) According to planning commission the Public Distribution System has become so inefficient that 58 percent of the subsidized grains do not reach targeted beneficiaries while one-third of it is siphoned from the system as leakage which is expected to be fixed by DBT.

6) Aadhaar based DBT helps eliminate duplicate cards and cards for non-existent persons or ghost beneficiaries.

7) Actual transfer of cash with micro automated teller machines (ATM’s) would infuse financial inclusion on a greater scale in rural India. (World bank shows, in India only 35% have formal accounts versus an average of 41% in other developing countries)

8) Aided by Aadhaar Technology, Direct Benefits Transfer will be world’s largest experiment in administrative reform. It will revolutionize the delivery of welfare measures in world’s biggest democracy.

Will Direct Benefits Transfer Scheme move in a Roller Coaster?

Probably it cannot solve all the problems of India’s poor and improve country’s human resources index because:

i) It will have problems with banks, post offices and online connectivity which have to be resolved.

ii) Aadhaar-DBT requires different agencies to work together – Central ministries, district officials, banks, frontier government officials, etc.

iii) Enrollment in Aadhaar needs to be universalized.

iv) Existing government databases need to be digitized.

v) Bank accounts need to be opened and linked to Aadhaar. The Banks and post offices has to be linked with APB and AEPS systems.

vi) Issues with technology implementation on the ground such as ensuring foolproof fingerprint recognition, especially for manual workers and the elderly.

vii) Issue of connectivity – ensuring real time online authentication where there is little or no mobile phone network(as in several MNREGA work sites and panchayats).

DBT in final analysis aims at reduction of poverty, inclusive growth and delivering better welfare measures and solutions.

No dought rampant corruption, inefficiencies and leakages have made many welfare schemes dysfunctional. Direct Benefits Transfer to the poor aims to mitigate these many malaise.

Why Aadhaar is superior to other Bio-metric systems

* By providing a single Bio-metric service across all government schemes, it provides uniformity of bio metric standards, and ensures economy in expenditure and convenience for all residents.

* It allows for inter-operability among banks and business correspondents.

* Aadhaar provides a mobile identity that accompanies the resident even when moving or migrating.



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