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  1. Banking on direct benefits transfer

Banking on direct benefits transfer

One of the most significant governance reforms undertaken by the government in recent years has been the Direct Benefits Transfer (DBT) initiative.

Published: June 12, 2018 4:47 AM
aadhaar, Aadhaar card, aadhaar status, aadhaar update, aadhaar benefits, UIDAI, Aadhaar Micro ATMs In 5 years, and with a budget of Rs 5 lakh crore, DBT has reached out to people with 450 schemes in various ministries/departments.

One of the most significant governance reforms undertaken by the government in recent years has been the Direct Benefits Transfer (DBT) initiative. By leveraging technology, DBT ensures targeted and timely delivery of subsidies and benefits, thus improving transparency and accountability in government delivery systems. Currently, 437 schemes in central, 57 schemes in line ministries and 1,045 in 35 states/Union territories have been identified under DBT.

DBT implementation requires a series of steps

It involves identity-linked transfers, where the identity of each individual is authenticated. Aadhaar is the preferred document in this case, it allows systems to authenticate the identity of the person through multiple means (physical, demographic, biometric). A lesser known fact is that for the government to seek Aadhaar data from an individual for a scheme, a notification needs to be issued under Section 7/57 of the Aadhaar Act, 2016, for each DBT scheme. The Aadhaar Act mandates ‘purpose limitation’, which means that the government cannot use Aadhaar data sought under one scheme for another scheme. So far, 226 notifications have been issued, and beneficiary data collected under each of these schemes has been stored in a separate database.

Aadhaar also ensures de-duplication and removal of fake/ghost beneficiaries, thus saving precious public funds. The estimated savings and gains since the inception of Aadhaar-based DBT in 2014 stand at Rs 90,000 crore (as on March 31, 2018). In fact, in FY18 alone, the government saved Rs 33,000 crore. Although Aadhaar is not mandatory, it is the preferred identity document; at the same time, Aadhaar exception handling mechanisms have been put in place to ensure there are no service denials for the lack of Aadhaar.

aadhaar, Aadhaar card, aadhaar status, aadhaar update, aadhaar benefits, UIDAI, Aadhaar Micro ATMs

Scope of DBT covers cash transfers into a beneficiary’s bank account and in-kind transfers where the government provides a benefit/subsidy in lieu of cash. Two of the largest schemes under DBT that involve in-kind transfers are the public distribution system (PDS) and fertilisers.

Systemic requirements for DBT implementation include:

1. Development of scheme software for each DBT scheme to store beneficiary data including Aadhaar and bank account details securely;

2. Coding of scheme conditionalities; and

3. Generation of payment instructions.

Further, the software should have the capability of exchanging data with (a) the Unique Identification Authority of India’s (UIDAI) Central Identities Data Repository (CIDR) to authenticate Aadhaar details of beneficiaries, (b) the Public Financial Management System (PFMS)—earlier known as the Central Plan Scheme Monitoring System (CPSMS)—to push payment files; PFMS, in turn, verifies the bank account details and Aadhaar seeding status on the National Payments Corporation of India (NPCI) mapper before registering a beneficiary, and (c) the DBT Bharat portal to report DBT data.

In addition, the location codes used in all such databases should conform to the Local Government Directory, maintained by the ministry of panchayati raj. Software for 437 schemes is getting created and is already in various stages of development. More than 50 have already been integrated with DBT Bharat.

Also, various state DBT portals are getting developed. The process of streamlining government systems is already leading to efficiency gains, reduced time in processing and delivering payments, reduced costs and removing middlemen. The rigorous requirements put in place for reporting DBT data necessitates ownership and accountability across all tiers of governance.

Number of beneficiaries: Although it is difficult to ascertain the unique number of beneficiaries across all schemes without a common database, scheme-wise number of beneficiaries are available. The largest scheme in terms of number of beneficiaries is the PDS with 80 crore beneficiaries. It is also worth mentioning PAHAL (22.86 crore) and MGNREGA (10.8 crore) here. Creating social registries is a possible way forward, which could explore the ideas of universal basic income and unconditional cash transfers at an appropriate time.

DBT in numbers

In 2017-18, 452 schemes in 58 ministries/departments in the government were identified for DBT implementation with an estimated budget of Rs 5.11 lakh crore, amounting to 3.05% of the nominal GDP of India at current prices (Rs 1.67 crore crore). In comparison, there were 142 DBT applicable schemes in 33 ministries and departments in 2016-17.

The total DBT expenditure reported in 2017-18 was Rs 1,90,870.91 crore (37.33% of DBT budget) comprising Rs 1,70,292.18 crore in electronic cash transfers and Rs 20,578.73 crore in providing in-kind benefits through Aadhaar-authenticated transactions. Expenditure under the two largest DBT schemes (PDS and fertilisers) has not been reported effectively in 2017-18, as adequate infrastructure and systems are still being put in place. It is expected that DBT implementation and reporting under these schemes will improve from the current financial year onwards.

By Arun Sharma

Director, DBT Mission, Cabinet Secretariat. Views are personal.

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