How Direct Benefit Transfer scheme has transformed social welfare in India

Source– The post is based on the article “How Direct Benefit Transfer scheme has transformed social welfare in India” published in The Indian Express on 19th October 2022.

Syllabus: GS3- Indian Economy

Relevance– Subsidies given by government

News- The article explains the DBT scheme of Indian government

IMF lauded India’s Direct Benefit Transfer Scheme as a “logistical marvel” that has reached hundreds of millions of people and specifically benefited women, the elderly and farmers.

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 .

How has the successful implementation of the DBT scheme been achieved?

DBT alone would not have been able to address the size and scale of the programme. An ambitious vision, holistic approach and a multi-pronged strategy enabled the DBT ecosystem to deliver results.

In 2014, the government started its financial inclusion programme in mission-mode. It strived to open bank accounts for all households, expanded Aadhaar to all. It also scaled up the coverage of banking and telecom services.

The Government evolved the Public Finance Management System. It 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.

What has been achieved by the DBT programme?

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 are delivering branchless banking services. There are more than 120 crore mobile subscribers. It now covers 318 schemes of 53 central ministries.

In rural India, DBT has allowed the government to provide financial assistance effectively to farmers with lower transaction costs. It has been possible through direct transfers for schemes like the PM Kisan Samman Nidhi, PM Fasal Bima Yojana. It has boosted 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 have improved the social mobility of all sections of society.

The efficacy and robustness of the DBT network were witnessed during the pandemic. 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 shows its effectiveness.

What is the way forward?

Improve digital and financial literacy.

Robust grievance redressal for DBT

Enhancing awareness and an empowering innovation system.