The Centre will have managed to make direct benefit transfer payments — 80% in cash and the balance under in-kind schemes — of around Rs 1,50,000 crore in 2017-18.
The Centre will have managed to make direct benefit transfer (DBT) payments — 80% in cash and the balance under in-kind schemes — of around Rs 1,50,000 crore in 2017-18, almost double the amount last year and 35% of its annual spending of `4,00,000 crore on subsidies and various other doles.
While this is moderate progress, three-fourths of the Centre’s welfare budget — subsidies plus other sops under the likes of job guarantee and scholarship schemes — will likely be disbursed through the DBT platform in 2018-19.
This assumes, on the basis of field data, that food and fertiliser subsidy distribution will have almost fully shifted to the Aadhaar-enabled platform well before the start of the year.
In fact, the pan-India roll-out of the in-kind scheme for fertiliser subsidy has just been completed — on Thursday, Jammu and Kashmir was the last state to join the scheme. Also, almost all of the 5 lakh ration shops in the country are now equipped with Aadhar-linked points of sale (POS) machines and about 60% of them are either using them or have used them at some point to authenticate the buyers. From April, use of POS machines will be almost universal at the fair price shops, meaning food subsidy delivery will be mostly through the DBT platform, as cash payments to the beneficiaty bank accounts in some urban areas and under the in-kind scheme in other parts of the country.
While DBT had allowed savings to the exchequer of over Rs 57,000 crore till FY17 — including Rs 30,000 crore under the DBT-Pahal scheme for LPG and Rs 14,000 crore as DBT-food —, pan-India roll-out of in-kind schemes for food and fertiliser subsidy will multiply the savings. As FE reported recently, according to preliminary estimates, the subsidy outgo on fertilisers has reduced by a third in January this year from a year ago thanks to the in-kind scheme.
While the Centre’s DBT programme is making major headway, many state governments too are giving DBT a further boost by increasingly using it to distribute their subsidies and assorted other sops, which annually cost them around Rs 3 lakh crore.
“Already, Andhra Pradesh, Madhya Pradesh, Rajasthan, Haryana, Karnataka, Tamil Nadu and Maharashtra have started DBT for several of their schemes. The state-DBT programmes would gather pace next year,” an official said.
The Centre’s DBT payments were just Rs 7,368 crore in 2013-14, but thanks to the JAM (Jan Dhan-Aadhaar and Mobile) platform, these jumped to Rs 38,926 crore in 2014-15 and Rs 61,942 crore in 2015-16. The growth slowed in 2016-17 (DBT payments of Rs 74,707 crore) because of the bottlenecks faced by the government in extending the DBT scheme to two key explicit subsidies — food and fertilisers. Now, using the route of in-kind DBT, this hurdle has been overcome and major acceleration of the DBT transfers is therefore likely in 2018-19.
So far in 2017-18, the Centre has transferred subsidies/benefits worth Rs 1.06 lakh crore (80% in cash and 20% in kind) using the DBT platform.