The DBT scheme is a well-planned and well-integrated initiative introduced to streamline the transfer of subsidies. Through this scheme, the government aimed to improve the delivery and design of existing procedures in welfare schemes.
The primary goal of this scheme is to ensure a seamless flow of funds and information to the beneficiaries and to reduce fraud in the delivery system. In addition, the scheme caters to the beneficiary with precision without the need for mediators, thus reducing delay. It also reduces the number of layers involved in the process of benefit provision.
History of Direct Benefit Transfer (DBT)
Direct Benefit Transfer (DBT) in India was initiated on January 1, 2013, with a pilot launch in selected cities. The official inauguration took place on January 6, 2013, in Gollaprolu, East Godavari district, by Jairam Ramesh, the then Union Minister for Rural Development, and N. Kiran Kumar Reddy, the former Chief Minister of Andhra Pradesh. The first phase of DBT targeted 43 districts, focusing on scholarships and social security pensions. By December 2014, the program expanded nationwide, incorporating 34 other schemes, including the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
How does direct benefit transfer work?
The process begins with the government complying with a list of eligible people for this scheme through the Central Plan Scheme Monitoring System (CPSMS). Afterwards, payment instructions are sent to the Public Financial Management System (PFMS) to initiate the payment instructions, which are then routed to banks after the validation of beneficiaries.
PFMS, which is integrated with 500+ banks, serves as a robust platform for verifying the beneficiaries’ bank accounts and Aadhar seeding their bank accounts with NPCI. This verification process has drastically reduced payment failures and delays.
Banks play a key role in the process as a last-mile delivery channel. Since all account-based transactions are routed through core banking channels, ensuring process efficiency has accelerated and streamlined the process of direct benefit transfers.
Also read: NSC scheme
Also read: Monthly income scheme
Types of schemes covered under DBT
The categories of schemes covered are as follows:
1. Cash transfer
Under the cash transfer category, the government immediately transfers cash benefits to the beneficiary. Examples of this category include NSAP, PAHAL and MGNREGA, among others. The government can transfer the money to the beneficiaries in the following ways:
- Beneficiaries directly receive the amount.
- They receive the amount through the State Treasury Account.
- The implementing agency appointed by the government makes cash transfers.
- The amount is transferred to them directly through the state or central government.
2. In-kind transfer
Under this category, the government offers in-kind benefits to beneficiaries directly or through appointed implementing agencies. In this, the government bears the expense of procuring a benefit or subsidy. For instance, the government will purchase certain products, such as food grains, and offer them for public distribution. The beneficiaries receive these products or services for free or at a reduced cost.
3. Other transfer types
This includes all the other types of benefits besides cash and in-kind transfers to non-government members, such as NGO workers, community workers, ASHA workers, teachers and others, that contribute to the implementation of government policies. They are not beneficiaries but are offered wages, training, food, incentives, and other benefits to serve the beneficiaries.
Benefits of direct benefit transfer
Some of the key benefits of direct benefit transfers include:
- The scheme accelerates the flow of information and funds securely while reducing the chances of fraud.
- It ensures precise targeting of beneficiaries.
- It omits the need for intermediaries, such as government officers, to transfer the subsidy amount into the beneficiary’s account.
- It offers transparency and eliminates malpractices in the subsidy distribution process, thus expediting the safe distribution of assets.
- Beneficiaries can only link a single bank account by seeding the deposits to their Aadhaar card details to prevent duplication of subsidies.
- This approach has enabled the unique linking of rural and urban households for government subsidies and easy money transfers.
Also read: Dhanlaxmi Yojana
Key government schemes under the direct benefit transfer
- Khelo India
- Atal Pension Yojana
- Green India Mission National Afforestation Program
- Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY)
- Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM)
- Deendayal Upadhyay Grameen Kaushalya Yojana
- Pradhan Mantri Bhartiya Jan Aushadhi Pariyojana (PMBJP)
- Pradhan Mantri Fasal Bima Yojana
- Pradhan Mantri Krishi Sinchai Yojana
- Pradhan Mantri Matsya Sampada Yojana
- Pradhan Mantri Vaya Vandana Yojana
- National Livestock Mission
- National Food Security Mission
- National Ayush Mission
- National Mission for Sustained Agriculture (NMSA)
- Swachh Bharat Mission Gramin
Conclusion
Direct benefit transfers have emerged as a crucial means for the Indian government to reform its delivery system by re-engineering the existing process of welfare schemes into a process that facilitates the faster and simpler flow of funds and information. They help ensure accurate targeting of the beneficiaries and reduction of fraud. In addition, it has emerged as a high-priority area for the government to deliver development schemes, having delivered over 450 schemes to more than 900 million people through this mode.
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