Going direct: Plug leakages in subsidy delivery, cut government expenses

Written by fe Bureau | New Delhi | Updated: Feb 28 2013, 10:33am hrs
In a bid to control expenditure and eliminate wasteful expenses, the Economic Survey has laid emphasis on initiatives like direct benefit transfer (DBT) for better targeting and improved delivery. Chief economic advisor Raghuram Rajan has said that DBT could reduce government expenditure and check leakages and distortions in the subsidy delivery system.

Under DBT, the amount under various schemes is transferred directly into bank accounts of the beneficiaries. The plan was rolled out on January 1 in 20 districts and covers seven schemes so far.

However, the survey says, the DBT scheme will not entirely replace delivery of public services for now, nor will it substitute for food and kerosene subsidies. The rollout was based on the twin pillars of Aadhaar generation and financial inclusion. In the first phase, DBT is being used mainly for scholarships and other welfare schemes.

India has embarked on a DBT scheme in selected districts wherein it has been envisaged that benefits such as scholarships, pensions, and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) wages will be directly credited to the bank or post office accounts of identified beneficiaries, the survey said.

It is believed that DBT for LPG and rural job guarantee programmes will be included in these 43 districts during the second phase by March 1. These districts are in 16 states and UTs. On LPG payment, a pilot project was launched in Mysore in 2011. So far, details of 35,000 customers have been collected. Of these, nearly 18,000 have authenticated Aadhaar numbers. As on November 25, 2012, OMCs had completed more than 35,000 successful biometric-authenticated deliveries, the survey stated.