Direct Benefit Transfer (DBT)

Direct Benefit Transfer (DBT) is an attempt by the Government of India to change the mechanism of transferring subsidies that were launched on January 1, 2013. This scheme or program aims to transfer subsidies directly to individuals’ linked bank accounts. Crediting subsidies into bank accounts is hoped to reduce leakages, duplication, and delay, while the new processes will increase transparency and accountability. The Andhra Pradesh smartcard project from 2006 was a forerunner to DBT. Internationally comparable precedents include Mexico’s social assistance program Oportunidades, which began in 2002 and is based on an earlier program Progresa, which began in 1997. Similar pilots include Shombhob in Bangladesh and Give Directly UCT in Kenya. Conditional cash transfers have also been implemented in South Africa, Jamaica, and Turkey. The first cash credit transfer in Brazil occurred in 1996.

DBT programs

DBT went into effect on January 1, 2013, with seven central sector schemes spread across 20 districts. In reality, only one district was able to manage the implementation. Following a prime ministerial review, the government decided to expand DBT to 27 central schemes in 78 additional districts beginning July 1, 2013. M Veerappa Moily, the minister of petroleum and natural gas, formally launched the direct benefit transfer scheme for LPG (DBTL) in 20 high Aadhaar coverage districts on June 1, 2013. LPG cylinder subsidies would be credited directly to consumers’ Aadhaar-linked bank accounts. When they book the first subsidized cylinder before delivery, all Aadhaar-linked domestic LPG consumers will receive an advance in their bank account. After receiving the first subsidized cylinder, the subsidy for the next cylinder will be credited to their bank account, which can then be used to purchase the next cylinder at the market rate until the annual cap of 12 cylinders is reached. On November 15, 2014, a modified Direct Benefit Transfer of LPG (DBTL) scheme was launched in 54 districts across 11 infstates, allowing LPG consumers who have yet to take advantage of the benefit to have a cash subsidy amount transferred into their accounts in order to purchase Liquefied Petroleum Gas (LPG) cylinders at market price.

DBT implementation

The Planning Commission established the DBT Mission to serve as the focal point for the implementation of DBT programs. In July 2013, the Mission was transferred to the Department of Expenditure, where it remained until September 14, 2015. To provide additional impetus, the DBT Mission and its related matters were transferred to the Cabinet Secretariat on September 14, 2015, under the Secretary (Coordination & PG).

• DBT was launched in 43 districts in the first phase, and 78 more districts were added later in 27 schemes pertaining to scholarships, women, children, and labor welfare. On December 12, 2014, DBT was expanded further across the country.

• In 300 identified districts with higher Aadhaar enrolment, DBT introduced seven new scholarship schemes and the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

• The Electronic Payment Framework was established by O.M.s dated 13.2.2015 and 19.2.2015. This Framework applies to all Central Sector (CS)/Centrally Sponsored Schemes (CSS) and all schemes where cash components are transferred to individual beneficiaries. It is to be followed by all Ministries/Departments and their attached Institutions/PSUs.

• Aadhaar is not required in DBT schemes. Aadhaar is preferred and beneficiaries are encouraged to have Aadhaar because it provides a unique identity and is useful in targeting the intended beneficiaries.

Present Status of DBT

DBT has yielded promising results in pilot programs being implemented across the country. PAHAL (modified DBTL for LPG subsidy), Public Distribution System (PDS) payments in Puducherry and Chandigarh, and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) payments in Jharkhand, and Bihar are examples of these. Since February 2015, the program has been fully implemented.

As of April 2017, DBT had onboarded 135 schemes from 25 Ministries/Departments. To obtain utility statistics

Scheme categories covered by DBT

The scope of DBT includes all welfare/subsidy schemes operated directly or through implementing agencies by all Ministries/Departments of the Government of India, which involve cash/kind benefit transfers to individuals. As a result, the scope of DBT includes the following types of schemes.

Cash Transfer

Cash Transfer to Individual Beneficiary – This category includes schemes or components of schemes in which the government transfers cash benefits to individual beneficiaries. For instance, PAHAL, MGNREGA, NSAP, and so on. This transfer of cash benefits from the Ministry/Department to beneficiaries occurs via the following routes:

• Beneficiaries are contacted directly.

• Beneficiaries are paid from the State Treasury Account.

• Beneficiaries will be served by any Implementing Agency designated by the Centre/State Governments.

In-kind

In-kind Transfer from Government to Individual Beneficiary – This category includes schemes or components of schemes in which the government provides in-kind benefits to individuals via an intermediary. Typically, the government or its agents incur internal expenditure to procure goods for public distribution and provide services to targeted beneficiaries. Individual recipients receive these goods or services for free or at a reduced cost.

Additional Transfers

Aside from these two types of schemes, there is another type of transfer from the government to various non-government functionaries who assist in the facilitation of various government schemes all the way to the end. This category includes transfers made to various enablers of government schemes, such as community workers and non-governmental organizations, in the form of honoraria, incentives, and so on, in exchange for the successful implementation of the schemes. ASHA workers under NHM, Aanganwadi workers under ICDS, teachers in aided schools, sanitation staff in ULBs, and so on are not beneficiaries themselves, but they are compensated, trained, and rewarded for their service to the beneficiaries/community.