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DBT transfers got off to a good start, but now hit slowdown mode

After a steep increase in 2015-16, direct benefit transfers (DBT) by the Centre seemed to have plateaued in 2016-17. Also, the pace of Aadhaar-linked DBT payments have been rather slow.

After a steep increase in 2015-16, direct benefit transfers (DBT) by the Centre seemed to have plateaued in 2016-17. Also, the pace of Aadhaar-linked DBT payments have been rather slow. While the government’s target is to disburse subsidies and assorted other doles worth Rs 3 lakh crore annually via the DBT mechanism, its DBT transfers were only to the tune of `57,162 crore during April-February 2016-17, compared with `61,824 crore in all of 2015-16.

Only less than a third of DBT fund transfers were through Aadhaar Payment Bridge (APB) in 2016-17, only marginally higher than 27% in the previous year. The rest of the payments under DBT were made using other electronic transfers including,  NEFT. The slow pace of APB transfers is even as 80% of the beneficiaries’ bank accounts are already seeded with the unique ID number.

Analysts say the tepid growth in APB payments can be attributed to various factors, including very little DBT-cash transfers so far in food and fertiliser subsidies amounting to Rs 2 lakh crore annually (roughly two-thirds of the government’s annual bill for social security and entitlements). While there is hardly any progress on DBT-fertiliser, the government is trying to roll out DBT-in-kind across the country by installing Aadhaar-enabled point of sale machines at PDS outlets to deliver foodgrains/kerosene directly to accurately identified beneficiaries.

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So far, it has installed PoS machines at 38% PDS outlets while 77% of ration cards are already Aadhar-seeded. As a result, over 2.33 crore fake ration cards have been weeded out since early 2013, helping the government save nearly Rs Rs 14,000 crore in two years. Similarly, 3.5 crore duplicate beneficiaries were weeded out in the PAHAL (DBT-LPG) scheme, resulting in savings of Rs 26,400 crore since 2014-15. In MGNREGS too, a saving of Rs 7,600 crore has been achieved.. Several states and Union Territories too have achieved significant savings through DBT. Still, both central and the state governments are miles away from achieving their stated objective of saving nearly 2% of GDP or half of the Rs 6 lakh crore spent on social security and entitlements by both annually, by plugging huge leakages in delivery system.

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