Direct Benefit Transfer (DBT) programme is an initiative by the Government of India, which involves the direct transfer of cash into the beneficiary’s cash account. Initially, the customer is expected to deposit the complete amount and the admissible subsidy is transferred into their accounts later on. This scheme was launched on 1st January, 2013, by the UPA-II Government in order to transform the service delivery in the country. Under this programme, Aadhaar, a biometric based identification system, is used to transfer the subsidies and the cash benefits directly into the beneficiary’s accounts.
The Central and State Government’s transfer of subsidies happens through intermediaries. This resulted in the considerable diminishing of the originally intended subsidy or the amount, by the time it reached the end user. The DBT aims to do away with the multiple layers of intermediaries in the process and directly transfer the amount electronically into an individual’s bank account.
The Aadhaar Card is the cornerstone of the DBT. Aadhaar is the first on-scale Digital ID service of the world, which is formless and paperless. The Aadhaar Card is based on biometrics and takes into account the fingerprints and iris of an individual. As the biometrics are unique to all, so is the identity of each Aadhaar Card user. ‘Aadhaar’ plays a unique role in enabling access to delivery of benefits and welfare measures. It not only empowers the individual with an ID, but provides a Digital ID which can prove their identity on an online, real time basis.
The Aadhaar Card is unique and does not change over the lifecycle of an individual, so the 12-digit Unique Identification Number (UIN). Aadhaar is sufficient to transfer any payments to an individual without bothering about any changes in the bank account of the individuals. Thus, the Aadhaar Card is being perceived as a financial address in India’s banking sector.
More than 80 crore Aadhaar cards have been issued till date, making Aadhaar the largest biometric programme in the world. The Aadhaar Card can be utilised by enterprises and service providers such as banks, telecom companies etc for improving their service delivery. Aadhaar can also be realised by various state departments, central ministries, PSU’s and private sector enterprises to provide service delivery to Indian citizens in an integrated manner.
In case of a DBT scheme, the Aadhaar number becomes the financial address of each individual. The Aadhaar cards are linked to the bank accounts in which the transfer of the amount takes place. The system of DBT runs on the `Aadhaar Payment Bridge’ (APB) and `Aadhaar Enabled Payment System’ (AEPS) which can handle millions of transactions in a day. Around 60.95 lakh transactions have been carried over the `Aadhaar Payment Bridge’ (APB) as on 31st March, 2016 disbursing over 681 crore.
The DBT scheme recognises the role of the post offices also, which means the beneficiary can avail the subsidy through the post offices. ‘Banking correspondents’ have been appointed by the Central Government. These are bank representatives who will help the villagers to open their bank accounts. The villagers need to give their thumb impression and after the verification of the requisite details, a bank account can be opened. The banking correspondents are provided with small machines which are known as ‘micro ATMs’.
These micro ATMs can be utilised by the farmers for the cash withdrawal from their DBT account. As the money can be procured only from the Aadhaar enabled bank account, it is imperative for all the micro ATMs to be Aadhaar enabled. The Public Distribution System (PDS) of India suffers from two major problems. One is of leakage and the other is of mis-targeting. The leakages occur when the benefits donot reach the intended recipient either due to corruption, pilferage or any other such cause. In the case of mis-targeting, the higher income groups also avail the benefits of the subsidies offered for the poor.
The Direct Benefit Transfer (DBT) programme has proved to be helpful in speeding up the transfer of the subsidies and plugging the leakages in the system. Due to the unique identity of each user, DBT has been successful in removing the fakes and duplicates from the system. This alone saves a lot of time and cost. With the post office banking and the banking correspondents coming into the picture, it brings banks to the doorsteps of the users who had no access to the modern financial services. The complete DBT system has led to the creation of jobs and has employed many.
The portability of the system ensures that the pensions and scholarships are delivered at one’s door steps irrespective of the individual’s location. This is because the authentication will happen electronically through Aadhaar. The major challenge under this programme is to identify the correct recipient. At present, a large proportion of the population has been designated to be falling under the premises of BPL, thus making them the likely recipient of the benefits. But an uphill task for the government will be to identify the correct and genuine recipient for this scheme by assessing their incomes. The coordination among the different governmental agencies at various levels is another difficult task. The enrolment in the Aadhaar card needs to be universalised and the existing databases need to be digitalised. Banks and post offices need to be linked to the APB and AEPS systems. It is actually a challenge for the government to make all the connecting links work together in a synchronous manner.
In the case of technological interventions, the government needs to ensure foolproof fingerprint authentication, especially for the manual worker and the elderly. It also needs to take into consideration the real time authentication programme at places where mobile connectivity is also deferred. According to the directions of the Government of India, DBT is to be implemented pan India through 35 centrally sponsored schemes. Post-matric scholarship for SC students, pre-matric scholarship for SC students, post-matric scholarship for OBC students, PAHAL scheme for LPG subsidy, Indira Gandhi Matritva Sahyog Yojana, Dhanalakshmi Scheme, Janani Suraksha Yojana, Rajiv Gandhi National Fellowship, Maulana Azad National Fellowship are some chief scheme under the DBT initiative.
PAHAL was the DBT scheme under which the transfer of the subsidy for the Liquified Petroleum Gas (LPG) was done directly into the customer’s bank account. It was launched by the LIPA—II government. Later on, the scheme was re-launched by the NDA government throughout the country.
Under this scheme, an individual can avail subsidies for 12 cylinders in a year and people with an income of more than ten lakh per annum will not be liable for any subsidy. This helped to address the issue of leakage and mistargeting simultaneously. At present, the government has introduced DBT in food subsidies in a few Union Territories.
This programme enables India to leapfrog generations of sub-optimal system and migrate directly to a cutting edge system. The end to end transparency offered by the system is helpful in doing away with the corruption from the society and taking India one step further in the process of its socio-economic development.