- The Economic Survey 2015-16 showed that in several price subsidies that governments offer, rich households benefit more from the subsidies than do poor households and distortions are created in the market that ultimately hurt the poor the most.
- Further, on account of their leakages not only are direct wastages created, but opportunity costs of how the government could have otherwise deployed those resources also pile up.
- It held that the benefit that price subsidies seek to create for the poor can be directly transferred to the poor through lump-sum income transfers, avoiding the distortions that subsidies induce.
- Against this backdrop, the goal of converting subsidies into Direct Benefit Transfer (DBT) mediated through the Jan Dhan, Aadhaar and Mobile Number (JAM) trinity was set into motion.
What is DBT?
- The DBT was originally envisaged as a scheme, where the welfare benefits provided by the Government are directly credited to the bank or postal account of the beneficiary.
- Till date, the DBT in India not only entails cash support to eligible beneficiaries but also in-kind transfers to them, covering over 300 Central and more than 2000 State schemes.
- Widely known examples of cash support include farmer income support programmes like the Pradhan Mantri Kisan Samman Nidhi (PM KISAN), pensions for the old aged, Divyangjan, widows, etc., under the National Social Assistance Programme (NSAP), scholarships for the deprived and other sections needing support; and instances of in-kind support like fertiliser subsidy, food grains support (Public Distribution System), mid-day meals for school children etc.
- Whereas the first set of support entails transfer of assistance in the respective bank accounts of the beneficiaries, the second bucket of schemes involves provision of in-kind goods and services to intended beneficiaries.
Use of Aadhaar
- The common theme is the use of electronic-ID Aadhaar for identifying and authenticating the intended beneficiaries.
- At the time of enrolling beneficiaries, the Aadhaar is captured; it is then authenticated vis-à-vis the details stored in the Unique Identification Authority of India (UIDAI)’s Central Identities Data Repository (CIDR).
- The use of Aadhaar doubles up not only as a unique identifier but also as a financial address. Under the Aadhaar Payments Bridge (APB), the Aadhaar number is mapped against a unique savings bank account and transfers to such accounts can be done using the Aadhaar number as the address. Further, under the Aadhaar-enabled Payment System (AePS), biometric credentials can be used by an individual to carry out banking transactions in Aadhaar-linked bank accounts.
World praises India’s DBT
- India’s Direct Benefit Transfer has been a force multiplier in facilitating the transfer of social safety net payments directly from the government to beneficiaries’ bank accounts, helping reduce leakages, curb corruption, and provide a tool to effectively reach households to increase coverage.
- The International Monetary Fund has hailed DBT for being a ‘logistical marvel’, with the World Bank also lauding the scale at which DBT impacts people’s lives.
- At the same time, DBT and accompanying governance reforms have been estimated to save the Government of India cumulatively a sum of Rs 2.23 lakh crore up till March 2021 or close to 1.1% of GDP.
- This figure has subsequently gone up to Rs 2.73 lakh crore as of March 2022.
Future Scope of DBT
- Wheels are already in motion for realising the next big-bang reforms titled DBT 2.0 and DBT 3.0.
- The DBT 2.0 focuses on an online eligibility verification mechanism using Aadhaar. Briefly, the Schemes often require applicants to submit eligibility documents or certificates issued by different government agencies and departments. Subsequently, the scheme implementing agency has to spend time and incur expenditure for verifying authenticity of such documents.
- The digitisation and Aadhaar seeding of such documents ensure citizen-friendly, real-time, and cost-effective verification or authentication. Platforms such as DigiLocker offer convenient ways to issue and access eligibility certificates in electronic and machine-readable format.
- The DBT 3.0 seeks to usher in a transformative shift in the scheme of benefit delivery to citizens. As things stand, citizens have to discover the Government schemes for which they would be eligible and apply to the concerned scheme implementing agency for availing the benefits.
- However, by pooling in data residing in various government databases, the State can suo motu reach out to eligible citizens and start delivering the envisaged benefits to them by obtaining their consent and willingness thereof.
- Several States have put in place such ‘Social Registries’ of varying levels of maturity and richness of data fields – such as Kutumba in Karnataka, Parivaar Pehchaan Patra in Haryana, Samagra in Madhya Pradesh, Jan Aadhaar in Rajasthan, Social Protection Delivery Platform (SPDP) in Odisha.
- The need now is to establish a national level social registry that builds on the states’ best practices and places governance in India on a peerless pedestal.
- For the far-reaching contemporary impacts of, and the possibility of futuristic reforms in India’s DBT paradigm, it is one of India’s most remarkable contributions to the discourse in ongoing G20 discussions.
- It clearly has the potential to promote harmony within our ‘One Family’ and engender hope for our ‘One Future’.