9 PM Daily Current Affairs Brief – June 20th, 2023
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Mains Oriented Articles
GS PAPER - 1
Refugees as assets to their new countries
Contents
Source– The post is based on the article “Responsibility and the complexities of climate leadership” published in “The Hindu” on 20th June 2023.
Syllabus: GS1 – Population and associated issues GS3 – internal Security
News- The article explains the status of refugees across the world. It also explains the challenges faced by displaced people.
What is the status of refugees across the world?
103 million individuals who have endured forced displacement due to conflicts and unrest worldwide.
The ongoing wars in Ukraine, Myanmar and Sudan, and the protracted situations in Afghanistan, and Somalia present an unprecedented challenge.
South and Southeast Asia are not immune to the challenges of displacement. India is home to some 250,000 forcibly displaced persons. Women and children constitute half of that population.
What are the issues faced by Refugees and asylum seekers?
They face challenges in their legal recognition and in obtaining government-issued documents. It hinders their access to essential services, including financial support and health care.
They want opportunities, not handouts. They wish to be self-reliant and are eager to use their talents and passions to contribute to the communities hosting them.
There are examples where refugee youth have shown extraordinary resilience and talent when given the right opportunity.
Taslima, a stateless person and twice displaced Rohingya woman in India, could fulfil her dream of being educated with career support and strong will. She is now a role model for other girls in her community.
Ayesha, an Afghan refugee, is slowly making her way towards pursuing a career as an artist-designer. She designed a line of swimwear recently for an up-and-coming brand, which is now on sale through an online store.
What are some facts about the Global Compact on Refugees?
It acknowledges the magnitude of the displacement crisis. It calls for solidarity through a whole of society approach.
It is built on the understanding that the responsibility towards the forcibly displaced is not limited to governments. It extends to each one of us including individuals, the private sector, non-government organisations and community-based organisations.
It also recognises that the Global South is disproportionately affected and that host communities need assistance.
It strives to enhance the international response, support host countries, promote self-reliance, and explore long-term solutions such as resettlement and safe returns.
What is the way forward for the well-being of refugees?
There is a need to cater to the unique needs of refugee youth. Youth should be engaged and include youth in the realisation of the Sustainable Development Agenda.
Let us embrace the principle of equitable burden-sharing and fulfil our responsibilities to refugees. There is a need to ensure their well-being and the well-being of their generous host communities.
Global community should stand in unison with refugees and displaced persons. It should recognise their strength, indomitable hope, and untapped potential.
GS PAPER - 2
Grassroots peace – Free and fair elections to local bodies are not possible without peace
Source: The post is based on the article “Grassroots peace – Free and fair elections to local bodies are not possible without peace” published in The Hindu on 20th June 2023
Syllabus: GS 2 – Devolution of powers and finances up to local levels and challenges therein.
Relevance: About Local body elections in West Bengal.
News: Local body elections in West Bengal has scheduled for July. Ever since the notification of polls, seven persons from prominent political parties have died.
About the High Court order
In response, Calcutta High Court directed the deployment of central forces in all districts. The court said that, The State government and the State Election Commission (SEC) do not have enough resources at their disposal to conduct the mammoth exercise across the State on a single day. The court also clarified that the cost of the deployment will be borne by the Centre and not the State government.
Both, the SEC and the West Bengal government have approached the Supreme Court of India challenging the Calcutta High Court order.
Read more: Focus on local bodies in govt push to improve ease of doing business |
What are the previous challenges with local body elections in West Bengal?
-In 2013, the SEC itself sought Supreme Court direction for the deployment of central forces.
-In the 2018 local body polls, there was no deployment of central forces. But, more than one-third of the seats were won by the ruling party of the state without any opposition. This is because the opposition parties were not allowed to put up any candidate in these seats.
– In the upcoming polls, the Opposition parties have not been able to file nominations in about 50 of the 341 blocks of the State amid reports of the intimidation of candidates.
Read more: Recommendation of 15th Finance Commission and challenges faced by Local Bodies |
What should be done?
The Governor has established a peace room. It is a control room where citizens can register their grievances related to the polls. The grievances filed will be forwarded to the State government and the SEC. The Governor urged the state government to consider complaints of violence seriously. This should be done.
West Bengal was among the first States to have a three-tier panchayat system aimed at democratic decentralisation. So, all the stakeholders including political parties should ensure the exercise of electing panchayat functionaries does not turn into lawlessness and chaos.
At the heart of Indo-US ties: Economics & Strategy
Contents
Source– The post is based on the article “ At the heart of Indo-US ties: Economics & Strategy” published in The Indian Express on 20th june 2023.
Syllabus: GS 2- International Relations
Relevance: Indo-USA relations
News- The article explains the engagements of Indo-USA relationship.
Narendra Modi heads to the United States for an official state visit on the invitation of President Joe Biden.
What lies ahead with regard to Economic engagements?
At the heart of the Indo-US strategic partnership is deepening economic engagement and a resolve on both sides to elevate the bilateral relationship to a “global strategic partnership”.
Modi’s visit comes at a time when the value of trade between the two countries has touched a record $191 billion, making the US India’s largest trading partner. For the US, India is the ninth largest trading partner.
American companies have invested around $60 billion in India in sectors ranging from manufacturing to telecommunications and consumer goods to aerospace.
Air India announced the purchase of more than 200 Boeing aircraft — a historic deal that President Biden said would “support over one million American jobs across 44 states”.
What are the Strategic underpinnings associated with the visit?
Central to this cooperation is also the post-pandemic consensus on diversifying and deepening supply chains with trusted countries.
Another strategic engagement is the Quadrilateral Security Dialogue, primarily as a counter to China’s growing influence in the Indian Ocean rim.
The I2U2, a grouping of India, Israel, the US and the United Arab Emirates, is focused on new initiatives in water, energy, transportation, space, health, and food security.
A new US-India initiative on Critical and Emerging Technologies started this january.
The two countries established a partnership to make the semiconductor supply chain more resilient through private sector cooperation.
What are the challenges in India-USA relationship?
The US still has significant export controls on India (instituted after the 1998 nuclear test), which inhibits the free transfer of technology.
Other trade issues that require resolution are visa delays and the revoking of India’s trade benefits under the Generalised System of Preferences (GSP) program in 2019.
India has signed up for three pillars of the Indo Pacific Economic Framework but has opted out of the fourth pillar (trade) citing reservations about the commitments required on environment, labour, digital trade, and public procurement.
There is growing disquiet within sections of the Union government over India not finding an entry into the Minerals Security Partnership (MSP), a US-led partnership to secure supply chains of critical minerals that is aimed at reducing dependency on China.
Indian Dollar Transfers That Beat Some GOI Welfare Spends
Contents
Source: The post is based on an article “Indian Dollar Transfers That Beat Some GOI Welfare Spends” published in The Times of India on 20th June 2023.
Syllabus: GS 2 – Indian Diaspora
Relevance: benefits of remittances for India and associated challenges
News: India leads globally in remittance receipts, surpassing Mexico and China and it has reduced the cost of receiving remittances.
As per the World Bank, India has reduced the average cost of receiving remittances in the last 10 years from around 9% to 4.65% which is less than the global average of 6.30%.
Why is there a need for lowering the cost of receiving remittances?
Low-cost leads to higher spending power.
Remittances, for India, are a source of external finance larger in size than FDI, portfolio or development assistance flows.
They narrow the current account deficit and being less volatile, provide stability to inflow of forex from abroad.
Studies have shown that remittances play a significant role in poverty reduction and improve health and educational outcomes of the recipient households.
Some calculations have shown that in the last five years, India’s cost reduction has put an additional ₹1.2 lakh crores in the hands of predominantly low-income households.
This is almost double the annual budgetary allocation of NREGA or PM Kisan Samman Nidhi.
What determines the cost of the remittances?
There are two components –1) Transaction fees; and 2) Foreign exchange margin.
Global analysis shows that transaction fees are the prime contributor to the overall cost.
However, after analyzing the cost of remittances in the countries like the US, the UK, it is found that the average foreign exchange margin costs are less than 1% in India.
Transaction fees get higher in cases where the sender and receiver do not have access to formal financial systems and when the services of an agent are involved in the collection or distribution of remittances.
However, globally, average costs are lower when Remittance Service Providers (RSPs) are mobile operators and when remitters/recipients use mobile money as payment instruments.
Further, several factors like regulatory compliance requirements, limited data exchange, non-interoperable technology platforms, and lengthy transaction chains can contribute to increased transaction costs. Insufficient competition among RSPs may also raise costs.
Must Read: Why remittance inflows growth could slow to just 0.2% in 2023
How is India overcoming these challenges?
PM Jan Dhan Yojana and use of direct benefit transfer have been transformative in fostering financial inclusion.
Unified Payments Interface (UPI), accompanied by accessible and affordable telecom services, is deepening the adoption of mobile mode for transactions.
The collaboration between the RBI and the Monetary Authority of Singapore has resulted in the establishment of interoperable linkages between the UPI in India and PayNow in Singapore.
What can be the way ahead?
The fintech sector in India has experienced significant growth which has caused innovative solutions and healthy competition. However, active support from other countries is crucial as one end of the transaction involves the country of the remitter.
Moreover, a significant reduction in transaction costs to 3% could save around $25 billion annually. More than 75% of these savings would benefit developing and least developed countries.
Countries can also learn from India in lowering the transaction cost and achieving the costs lower than the United Nations Sustainable Development Goal (SDG) target of 3%.
GS PAPER - 3
Safety first – India’s regulators must ensure quality and safety of drugs
Source: The post is based on the article “Safety first – India’s regulators must ensure quality and safety of drugs” published in The Hindu on 20th June 2023
Syllabus: GS 3 – Changes in industrial policy and their effects on industrial growth.
Relevance: About issues with Indian-made drugs.
News: Two patients have recently died after being given Indian-made anaesthetic drugs in Sri Lanka. This has raised questions about imported Indian drugs.
What are the recent issues highlighted in Indian-made drugs?
-A few months ago, the United States found a highly drug-resistant bacteria in Indian-made drugs.
-Last year, the World Health Organization (WHO) linked the deaths of at least 70 children in the Gambia from acute kidney injury, to Indian-made cough syrups. Deadly chemicals such as diethylene glycol and ethylene glycol were used as a cheaper alternative for propylene glycol. A detailed causality assessment by the Gambia and independent investigations found a link between the deaths and the toxic chemicals.
Similarly, last year, Uzbekistan claimed that children died after consuming India-made cough syrup.
Note: Diethylene glycol-contaminated drugs have led to at least five incidents of poisoning in Chennai, Mumbai, Bihar, Gurugram and Jammu between 1972 and 2020.
-Earlier this year, WHO flagged the contaminated drugs found in the Marshall Islands and Micronesia due to Indian-made cough syrup.
Must read: Issues with the drug regulatory system in India – Explained, pointwise |
What should be done?
The Indian drug regulator has so far failed to institute measures to make sure drugs produced in India for export and domestic use are safe. To protect India as a pharmacy of the global south, the regulator should act as a watchdog to ensure drug safety, and not as a facilitator for the pharma industry.
Read more: INDIAN PHARMACEUTICAL SECTOR CHALLENGES AND REFORMS |
Record-breaking temperatures: In the hot seat
Contents
Source: The post is based on the article “Record-breaking temperatures: In the hot seat” published in the Indian Express on 20th June 2023
Syllabus: GS 3 – Environment and Bio-diversity Conservation.
Relevance: About 1.5 degree Celsius mark.
News: Earlier, the World Meteorological Organisation warned that temperatures in at least one of the next four years would be higher than the pre-industrial era average by 1.5 degree Celsius. Now, the EU’s Earth Observation Arm, Copernicus, has reported that this threshold was breached in the first week of June. This is the first time that global mean temperatures have exceeded the 1.5 degree Celsius figure during a summer month.
What is the Copernicus programme?
Read here: Copernicus programme |
What will be the impact of breaching the 1.5 degree Celsius mark?
The Paris Agreement refers to global mean temperatures over a 20- or 30-year period. But crossing the 1.5-degree mark frequently will make the cumulative effect of these increases a serious issue. For instance,
-A long-term breach of the 1.5 degree threshold could aggravate climate impacts, including heatwaves, floods and droughts.
-Living with such weather vagaries would require paradigm shifts, especially in the areas such as agriculture, urban planning, and disaster warning and mitigation systems,
What are the challenges in mitigation and adaptation financing at present?
Inadequate finances: The last IPCC report underlined, “finances for adapting to climate change have been particularly low”. The UNEP estimates that $340 billion will be needed every year for climate adaptation, but less than $30 billion gets allocated for the purpose.
Improper method of financing: An OECD assessment shows that 70% of public climate finance is provided through loans where the funder expects a financial return.
Investments provide no immediate return: Interventions such as disaster warning systems or building flood defences do not generate immediate revenue.
Disproportionate impacts: For instance, Pakistan contributes barely 1% of the world’s GHG emissions, but last year’s floods alone cost more than $30 billion for them.
Overall, the current financing structure does not address the challenges of a large majority of climate-vulnerable countries, they are also amongst the most resource-strapped.
Read more: On climate change, wealthy nations must show the way |
What should be done?
France will soon hold an international summit “aimed at taking stock of the ways and means of increasing financial solidarity with the Global South.” The decisions taken at the meeting are likely to feed into the agenda of COP 28 in Dubai. So, the delegates should consider the recent rise in temperatures seriously.
Rationalising prices – Excess use of urea should be contained
Source: The post is based on the article “Rationalising prices – Excess use of urea should be contained” published in the Business Standard on 20th June 2023
Syllabus: GS 3 – Issues related to direct and indirect farm subsidies and minimum support prices.
Relevance: About bringing urea under NBS.
News: Recently, the Commission for Agricultural Costs and Prices (CACP) has recommended that urea should be brought under the nutrient-based subsidy (NBS) regime, like all other fertilisers.
The Objective is to a) foster parity in the prices of fertilisers containing nitrogen (N), phosphorus (P), potassium (K), and other plant nutrients, and b) ensure fertiliser applications are balanced and need-based.
What is the need for bringing urea under NBS?
Overuse of Urea: The unduly low price of urea, vis-a-vis other fertilisers, has resulted in the overuse of nitrogen and inadequate application of other equally essential nutrients, including some vital micro and secondary plant nutrients. This has consequently adversely affected the soil health and its fertility. For instance, the consumption of urea increased by over 33% since 2010. But other fertilisers registered only marginal gains. The latest estimates reckon the NPK use ratio at 13:5:1, instead of the ideal 4:2:1.
Increased fertiliser requirement: Due to the above issue, higher doses of nutrients are now required to get the same level of crop yields. Continuing this situation would severely impact farming, particularly profitability, which has already been severely eroded.
Increasing fertiliser subsidies: Farm scientists have been demanding the inclusion of urea under NBS ever since the mechanism of NBS was conceptualised in 2010. But successive governments have rejected it as urea pricing is a politically sensitive issue. As a result, fertiliser subsidies have touched a high of nearly Rs, 2.3 trillion in 2022-23.
Failure of other measures: Initiatives like mandatory neem-coating of urea, and the introduction of soil health cards were intended primarily to promote judicious use of plant nutrients. But these measures have failed to produce the desired results.
Considering the above points, rationalising prices seems the best way to restore the nutrient-use balance for the sake of sustainable agriculture.
Must read: Why urea rules India’s farms |
Why it is the right time for bringing urea under NBS?
Due to the re-commissioning of three defunct fertiliser plants and the availability of innovative Nano urea, domestic production of urea has begun to increase and the need for imports is waning rapidly. Further, the Russia-Ukraine conflict has eased fertiliser prices. So, the government thus should take this opportunity to rationalise fertiliser prices, as advised by the CACP.
Must read: The need for a new fertilizer policy in India. |
Indian Dollar Transfers That Beat Some GOI Welfare Spends
Contents
Source– The post is based on the article “Indian Dollar Transfers That Beat Some GOI Welfare Spends” published in The Times of India on 20th June 2023.
Syllabus: GS3 – Indian Economy – Money and Banking
News- The article emphasis the importance of reducing the cost of remittances.
India crossed a milestone of achieving remittances inflow of more than $100 billion. India stands first globally in remittances receipts with a long lead over Mexico and China.
Another remarkable achievement is reducing the cost of receiving these remittances.
As per the World Bank, India has reduced the simple average cost of receiving remittances in the last 10 years from around 9% to 4. 65% for a typical $200 transaction. Which is cheaper than the global average of 6.30%.
What are the benefits of reducing costs?
Firstly, Cost saving = Higher spending power
Secondly, it reduce the current account deficit and being less volatile, provide stability to inflow of forex from abroad, and more importantly, remittances provide financial lifeline to families and relatives back home.
Thirdly, remittances play a significant role in poverty reduction and improving health and educational outcomes of the recipient households.
What are the challenges in reducing costs?
Global analysis shows that transaction fees are the prime contributor to the overall cost. It is typically higher, where the sender and the receiver are not able to access the formal financial system.
The costs are more where the services of an agent are used for collection or distribution of remittances.
Studies have pointed out that the frictions associated with verification, regulatory compliances, data exchange, non-interoperable tech platforms, and long transaction chains may cause the transaction costs to increase.
How is India overcoming these challenges?
PM Jan Dhan Yojana and pervasive use of direct benefit transfer under government programmes have been transformative in intensifying financial inclusion.
Zero cost, safe and efficient money transfer through digital public infrastructure in the form of Unified Payments Interface (UPI) is deepening the adoption of mobile mode for transactions.
Interoperable linkages like UPI-PayNow achieved by RBI and Monetary Authority of Singapore will enable users of each of the two fast payment systems to make instant, low-cost fund transfers on a reciprocal basis.
With the emergence of 2,000-plus startups and 20-plus unicorns in fintech in India in the last few years, the vibrant fintech ecosystem lays the foundation for innovative solutions and healthy competition.
What is the way forward?
Active support of other countries is critical to enable ease of validation, compliance and transmission.
India has been taking up this matter in various forums like G20, WTO and with its partners in free trade agreements.
Active pursuit of these strategies has delivered promising results till now and the future looks India’s experience and strategies surely provide a pathway forward.
The time for an honest and open dialogue on climate is right now
Contents
Source: The post is based on the article “The time for an honest and open dialogue on climate is right now” published in Live Mint on 20th June 2023.
Syllabus: GS 3 – Climate Change, Energy
Relevance: concerns with Renewable Energies
News: Governments consider climate change as a serious challenge, but they tend to come up with normal solutions for fixing it rather than looking at the multifaceted angle.
What kind of solution is provided for climate change?
It is always thought that climate change can be fixed cheaply with solar and wind energy. This restricted thought fails to capture the complexity of the climate challenge and hinders progress in addressing its multifaceted challenges.
Therefore, it is important to consider the costs and feasibility of proposed solutions, weighing both the costs of climate change and costs of climate policy.
What are the different factors that need to be considered in tackling climate change?
It is not only climate change but population dynamics, age distribution, income levels, technological advancements, regulation and governance all play a role in shaping the supply and demand of economic goods and services.
As per a UN report, for most economic sectors, the impact of climate change will be small relative to the impacts of other drivers.
Moreover, many countries believe solar and wind power alone can solve their energy challenges.
However, while solar and wind can contribute to reducing greenhouse gas emissions, assessing their limitations and potential drawbacks is crucial.
What are the limitations of solar and wind energy?
Dependence on Geographical Factors: The effectiveness of renewable energy sources depends on geographical factors and available resources.
These sources require significant upfront investments, and their intermittent nature raises concerns about grid reliability and energy storage.
Employment Issues: Transitioning entirely to solar and wind power presents engineering challenges and may have adverse effects on industries reliant on fossil fuels, potentially leading to job losses and social disruptions.
Environmental Damage: The mining and processing of critical minerals and rare earths for renewable technologies can cause significant environmental damage and impact communities, traditions, and cultures.
Therefore, the cost of implementing renewable energy infrastructure and the potential impact on energy prices should be carefully evaluated, especially for low-income households and industries sensitive to energy costs.
Limited Battery Storage Capacity: The battery storage capacity for solar and wind energy storage is limited to a few minutes. This highlights the need for significant investments in battery technologies.
Must Read: The difficulty with renewables
What can be the way ahead?
First, to effectively address climate change, it is important to prioritize innovation and technological advancements rather than relying solely on government regulations and subsidies.
Second, investing in research and development of clean energy technologies, including nuclear energy and advanced carbon capture and storage can play a crucial role in tackling climate challenges.
Third, there is a need to acknowledge the opportunity costs and trade-offs associated with climate choices because solely relying on market mechanisms for emissions mitigation may not be sufficient.
Fourth, exploring complementary energy sources, such as hydroelectric or low-carbon traditional sources, can help bridge the gap between intermittent supply and consistent demand.
Fifth, it is also necessary to acknowledge that climate change is not the only problem and there is a need for broadening our perspective.
On defaulters, RBI prioritises public interest
Source– The post is based on the article “On defaulters, RBI prioritises public interest” published in “The Indian Express” on 20th June 2023.
Syllabus: GS3- Indian economy and mobilisation of resources
Relevance- Issues related to banking system
News- On June 8, the Reserve Bank of India set out a framework for bank settlements with defaulters.
Why should banks settle with defaulters?
When there is a default, the primary objective of a bank is to recover as much of the loan as possible. Various options might be available to the bank.
The bank decides the best strategy based purely on commercial judgement.
Why is it wrong to think that the RBI has permitted something unusual?
One-time settlements are part and parcel of the business of banking. The RBI has simply given a formal regulatory structure to a standard banking practice.
Some of these settlements can indeed be with wilful and fraudulent defaulters. When trying to recover a loan, a bank should not make any distinction between wilful, and fraudulent default. It is up to the bank to decide whether a settlement is a better and quicker option. The sole motivation behind such a decision should be to maximise recovery.
The RBI circular makes it clear that banks can file cases against fraudulent or wilful defaulters.
As per circular, banks will undertake settlements “without prejudice to the criminal proceeding underway against such debtors”. In other words, the circular does not condone any crime.
What are some valid concerns raised by this circular?
Government control over public sector banks– The settlement process might be misused to favour politically connected defaulters at the cost of the banks’ commercial interests. It is the responsibility of RBI to allow commercially prudent decisions and prevent politically motivated ones.
There is ample evidence that private sector banks have been settling with wilful defaulters. So, questions arise about the need for this circular.
The answer possibly lies in the fact that two-thirds of the Indian banking system is owned by the government. The RBI circular gives these banks regulatory cover for settlement-related decisions.
Therefore, the circular merely levels the playing field. But the need for such a circular underscores the distortions that the Indian banking system suffers from government ownership of banks.
Regulatory governance– A year ago, the RBI recommended that the RBI place all draft instructions on its website for stakeholder comments. Exceptions should be made only in special circumstances.
There do not appear to have been any special circumstances surrounding the RBI circular related to settlement. There were no issues related to financial stability, or fiduciary duty, or confidentiality.
At the same time, the circular is of great public interest since it applies to entities against whom criminal proceedings are underway.
Hence, the draft circular should have been placed on the RBI’s website for public consultation along with a discussion paper clearly explaining its rationale.
[Yojana June 2023 Summary] Direct Benefit Transfer (DBT) in India: A global role model – Explained, pointwise
Contents
For 7PM Editorial Archives click HERE → |
Introduction
Direct Benefit Transfer (DBT) in India has emerged as a pioneering model in ensuring the efficient and effective transfer of government welfare benefits. By leveraging technology and India’s unique identity infrastructure, DBT directly channels funds to beneficiaries’ accounts, minimizing leakages and corruption. It represents a successful amalgamation of public policy and technology, prompting global recognition. As India shares this innovative approach at international forums like G20, DBT’s potential as a global role model for welfare distribution becomes increasingly evident.
What is DBT?
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The DBT was envisioned as a system where welfare benefits provided by the government are directly credited to the identified beneficiary’s bank or postal account. Over time, the initiative has expanded, growing both in its scope and coverage.
The scope of DBT has widened: From merely providing cash support to including in-kind transfers. Today, it covers more than 300 Central schemes and over 2000 State schemes. The benefits provided range from cash assistance to in-kind goods and services.
Cash support schemes: such as the Pradhan Mantri Kisan Samman Nidhi (PM KISAN), which supports farmers, and the National Social Assistance Programme (NSAP), providing pensions for the elderly, Divyangjan, and widows. There are also scholarships for deprived sections needing support.
In-kind support schemes: Include the fertilizer subsidy, the Public Distribution System for food grains support, and the Pradhan Mantri Poshan Shakti Nirman (PM POSHAN) which provides mid-day meals for school children.
Use of Aadhaar: DBT schemes employ the use of the electronic ID Aadhaar for identifying and authenticating the intended beneficiaries. During the enrollment of beneficiaries, their Aadhaar details are captured and subsequently authenticated against details stored in the Unique Identification Authority of India (UIDAI)’s Central Identities Data Repository (CIDR).
The frequency of this authentication process depends on the particular scheme. For instance, in the case of PM KISAN, Aadhaar authentication occurs only at enrollment, while for the Public Distribution System, beneficiaries must authenticate their Aadhaar each time they access their quota of grains.
What is India Stack and how DBT in India is integrated with it?
India Stack is a unified platform comprising open APIs and digital public utilities, with the objective to harness the key elements of identity, data, and payments at a large scale. It is essential to understand that Direct Benefit Transfer (DBT) is not a social assistance program in and of itself, but rather a mechanism to consolidate and control data on direct benefit transfers from various sources.
For cash schemes, DBT relies on bank account numbers or Aadhaar-linked accounts to directly transfer social benefits to beneficiaries. In this process, Aadhaar plays a dual role. Not only does it serve as a unique identifier, but also as a financial address. This takes place under the Aadhaar Payments Bridge (APB) system where an individual’s Aadhaar number is mapped against a unique savings bank account, enabling transfers to such accounts using the Aadhaar number as the address.
Furthermore, under the Aadhaar-enabled Payment System (AePS), an individual can use their biometric credentials to carry out banking transactions in Aadhaar-linked bank accounts.
Read more: DBT Scheme has been beneficial for India in meeting the diverse needs of its population |
What are the benefits of implementing DBT in India?
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Efficiency: DBT eliminates intermediaries, ensuring that funds directly reach the intended beneficiaries, making the process faster and more efficient.
Transparency: Since the transfer of benefits is done electronically, it reduces the chances of funds being misused, creating a transparent system of fund allocation.
Reduction in corruption: DBT helps curb corruption by cutting out intermediaries and reducing opportunities for funds to be siphoned off.
Reduced leakages: The program minimizes the leakage of funds that typically occurs in traditional welfare schemes where resources are diverted away from the intended beneficiaries.
Identity verification: Using Aadhaar for beneficiary identification aids in ensuring that the benefits reach the correct individuals.
Reduced expenditure for government: By eliminating wastage, DBT helps the government save significant resources that can then be deployed for other welfare schemes.
Financial inclusion: DBT encourages people, especially from rural and underprivileged backgrounds, to open bank accounts, thus promoting financial inclusion.
Real-time tracking: DBT allows for real-time tracking of fund disbursement, helping identify bottlenecks and areas of improvement.
Empowerment: Direct cash transfers enable beneficiaries to have greater control over their funds, enhancing their decision-making power and overall empowerment.
Must read: How Direct Benefit Transfer scheme has transformed social welfare in India |
About DBT in India’s role in the G20 agenda
India’s ongoing Presidency of the G20 is committed to being inclusive, ambitious, action-oriented, and decisive. India’s vision is that its initiatives for ‘leveraging technology for citizen welfare’ can lead to a fundamental mindset shift and benefit humanity as a whole. In line with this vision, DBT serves as an exemplary example of Indian innovation. India is seeking to introduce its home-grown DBT paradigm, which is based on Digital Public Infrastructure (DPI), to the world through the G20 platform. The initiative is particularly targeted towards the Global South.
DBT in India is not just a national initiative; it also aligns with India’s broader goals within its co-chairship of the Global Partnership for Financial Inclusion. For its impact on promoting transparency, DBT was also showcased in the G20 Anti-Corruption Working Group Meeting.
Must read: Direct Benefit Transfer (DBT): Advantages and Way Forward – Explained, pointwise |
How has the World reacted to DBT in India?
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DBT in India has garnered international recognition for its significant impact on social welfare and governance reforms.
The International Monetary Fund (IMF) applauds DBT: IMF praised DBT for its scale and logistical prowess in reaching hundreds of millions of low-income individuals. The institution called DBT a ‘logistical marvel’ for the impressive reach of its programmes.
World Bank lauds DBT’s reach and impact: The World Bank also commended the scale at which DBT impacts lives. Owing to DBT’s digital cash transfers, India succeeded in providing food or cash support to an astounding 85% of rural households and 69% of urban households. This achievement is a testament to the efficacy of DBT in reaching large populations with crucial support.
DBT’s contribution to government savings: Beyond its impact on individual lives, DBT and its accompanying governance reforms have significantly contributed to government savings. By March 2021, these reforms had saved the Government of India a cumulative sum of Rs 2.23 lakh crore, which is approximately 1.1% of the nation’s GDP. By March 2022, these savings had increased to Rs 2.73 lakh crore, further emphasizing the economic impact of DBT.
What does the future hold for DBT in India?
The future of DBT lies in two proposed initiatives: DBT 2.0 and DBT 3.0.
DBT 2.0: It aims to streamline the process of verifying eligibility for various schemes. Currently, applicants must submit various eligibility documents or certificates issued by different government departments, which then must be verified by the scheme’s implementing agency. This process can be time-consuming and costly. The new initiative will digitise and link these documents to Aadhaar, ensuring efficient, real-time verification. Platforms such as DigiLocker and API Setu will facilitate access to these certificates in electronic and machine-readable formats. Many states and central government departments have already adopted this system, and efforts are underway to onboard the remaining ones.
DBT 3.0: It envisions a transformative change in the way benefits are delivered to citizens. Currently, citizens must discover eligible government schemes and apply for them to receive benefits. Under DBT 3.0, the government will proactively reach out to eligible citizens based on data from various government databases. The delivery of benefits will commence upon receiving the beneficiaries’ consent.
Several states have implemented ‘Social Registries’, which are databases of beneficiary information, such as Kutumba in Karnataka, Parivaar Pehchaan Patra in Haryana, Samagra in Madhya Pradesh, Jan Aadhaar in Rajasthan, and Social Protection Delivery Platform (SPP) in Odisha. The next step is to establish a national-level social registry that incorporates best practices from state-level initiatives, further revolutionising governance in India.
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India’s Direct Benefit Transfer scheme has revolutionized the delivery of social welfare benefits, ensuring efficient and direct access for beneficiaries while reducing corruption and wastage. Its success has received international recognition, further cementing India’s position as a leader in leveraging technology for social welfare. The future plans for DBT in India promise to build upon its successes, further streamlining the process of benefit delivery and enhancing its impact. Indeed, the DBT paradigm is one of India’s most significant contributions to the global welfare discourse.
Source: Yojana
Syllabus: GS 2: Social Justice: mechanisms, laws, institutions and Bodies constituted for the protection and betterment of vulnerable sections.
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