How Direct Benefit Transfer (DBT) program facilitating India’s growth

Direct Benefit Transfer (DBT) program is the direct transfer of subsidy or cash for various scheme to the beneficiaries to his or her bank account eliminating the leakage of subsidy benefit. It was launched by the previous government on January, 1, 2013 whose legacy has been carried on by the present NDA government with efficacy and recorded the Guinness World Record in December, 2015 linking largest number of people with Direct Benefit transfer plan for various schemes and transferring 40,000 crore rupees to the beneficiaries bank account linked without leakages and delays. 


Initially, it was launched in 20 districts covering scholarships and social security pensions schemes. The government, later reviewed the programme and launched it in other 78 districts and covering more beneficiaries under this project. The NDA government voted to power in May, 2014 and PM Narendra Modi focused the programme at greater level with eliminating the leakages and corruption prevailing in the subsidized programme of the government.


India’s Subsidizing distribution has been criticized by many scholars and economists for improper distribution of funds for the poor in the form of subsidy. As, the subsidy is usually paid through the commodities like LPG, Petrol, Diesel, Kerosene etc which can be bought by anyone and most of the time, the genuine people for which subsidy is meant to be remained out the circle of getting benefit of Centrally Sponsored Schemes.

Hence, the Union Government of India initiated the program to get rid of two major issues of subsidy programs- Target users and Leakages. DBT program will provide transparency, hassle free payment to the beneficiaries direct to their bank account and terminate the improper distribution of funds provided on Centrally sponsored schemes. The targeted consumer will get Aadhaar card (Unique identification number for the Indian citizens) which will be linked to his or her bank account. Government is also mulling to link the Mobile number of the consumer under the project Jan-Aadhaar-Mobile (JAM) to bring out more transparency in the system and more targeted subsidy to the poor. This will also aid the Union Government to implement all other schemes to provide Direct Benefit transfer to the citizen of India and terminate the leakages.

Jan Dhan Yojana has been started to alleviate Financial Inclusion in the country and to have at least one bank account of every household in the country, and on the other hand, Aadhaar card will be issued with Unique 12-digit number which will be linked to bank account of the beneficiary. Centrally Plan Schemes Monitoring System (CPSMS) are implemented through the office of Controller General of Accountants, which help in listing beneficiaries and their bank account with Aadhaar number for routing DBT. This will be used for the payment of subsidy directly to the bank account of the beneficiary through Aadhaar Payment bridge by NPCI (National Payment Cooperation of India).
– It is the largest rural employment scheme started in 2005 with aim to alleviate the condition of the poor in rural areas with 100 days, increased to 120 days of guaranteed employment. But, recent reports and complaints have lighted on the leakage and corruption in giving finalized wages to the worker. Contractors deployed in various districts to pay wages to the workers, have found to be indulge in fraudulent. Thus, it pushed the Union Government to link bank account of the worker via Aadhaar number to directly pay the wages of the workers.
This should be appreciated that government successfully linked 5 crore workers bank account for DBT and 20,500 crore rupees have been directly transfer to the beneficiaries bank account terminating the loop holes in the system.
– Consumers get 12 subsidized LPG cylinder in a year. Union Government used to levy the subsidy on LPG cylinder before being purchased and hence, it occurred the mis-targeting problem. Since, Union Government has launched DBT program, named PAHAL (Partyaksh Hanstantrit Labh) started nationwide in January, 2015 through which consumers will not only get LPG connection with online application, but also get subsidy amount of 12 cylinders in a year whenever the cylinder will be booked and purchased by the consumer from LPG cylinder contractor.
Till November, 2015, 15 crore beneficiaries have been benefited from PAHAL scheme with DBT plan avoiding mis-targeting. And, the appreciated step taken lately by the government is that the terminating of subsidy to the consumers of 10 lakh income per annum. 
DBT in Pension Schemes
– There are various pension schemes run by the Union Government of India. The pensioner usually get delayed in his or her pension in loopholes of the government system. Now, the government has attached various Pension Schemes with DBT program avoiding the hassle-free payment direct to their bank account. Till the end of 2016, Government is going to fully implement the DBT in all pension schemes.
DBT in Food Subsidies:
– Public Distribution Scheme has always been under scanner due to the leakage of the subsidized food and mis-targeting of the poor. Union government has only implemented this scheme in Chandigarh and Puducherry territories whose success is going to procure nation wide. This will reduce subsidy leakage up to 30-40% and terminate mis-targeting issue. It is estimated to reduce the subsidy burden up to 40-50% on the Union government.
DBT in Kerosene
– Lately, the Government of India has announced to start DBT mechanism in Kerosene distribution. Right now, government uses to give subsidized Kerosene for the poor as it is till used as the cooking fuel in the households. But, other industries and adulteration of diesel is also been reported and which indirectly raised the subsidy burden on the government. Thus, from March 2016, GOI is looking to implement DBT plan in Kerosene distribution and cash will be transfer in the account of the beneficiary every year and also terminate the other illicit use of Kerosene.
DBT in Fertilisers
– Fertilisers subsidy is been widely given to the small and marginal farmer. This helps the farmer to get fertilizer at lower rate for its crop production. With the advent of New Urea Policy in May 2105 in which 100% Neem coated Urea will be sold in the market to maximize the benefit of fertilizers and enhance the crop productivity. It will also avoid the misuse of the urea for industrial purposes. But, this is sold at subsidized rate in the market which rise to the error in the distribution of subsidy to beneficiary farmers only. Now, the government is contemplating to implement DBT plan via Aadhaar number. Farmers will be registered under this scheme and a card will be given on which swiping it on the fertiliser retailer shop, the subsidy amount will be credited to the linked bank account of the beneficiary. 5,000 rupees annually has been calculated to be transfer to the bank account of a farmer whenever he buys fertiliser and swipe the card.    


Direct Benefit Transfer is the need of hour for the growing India. It will aid the government in terminating pilferage in the distribution of subsidies given on various schemes, and also targeting issues like mis-targeting of subsidy, leakages, corruption, over-subsidising various schemes etc. There are plenty of Centrally Sponsored Schemes which all should be linked to DBT mechanism and enable the implementation of schemes at root or ground level. This will also help in reducing the expenditure and meeting the budget deficit target of the Union government. It is going to be win-win situation for both the government and the beneficaries.   

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