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Wednesday, June 2, 2021

Direct Benefit Transfer (DBT) - Indian Economy

Direct Benefit Transfer (DBT)

In 2015, 

  • The new government in the Centre introduced the game-changing potential of technology-enabled Direct Benefit Transfer (DBT), namely the JAM (Jan-Dhan-Aadhar-Mobile) Number Trinity solution. 

Direct Benefit Transfer (DBT) - Indian Economy

  • It offers possibilities for effectively targeting public resources to those who need them most, including all those deprived in multiple ways. 

  • Under it, the beneficiaries will get the money 'directly' into their bank or post-office accounts linked to their 12-digit biometric identity number (Aadhar) provided by the Unique Identification Authority of India (UIDAI).

  • The idea was first initiated by the GoI in 2013 (UPA-II) on a pilot basis with seven schemes in 20 districts of the country.

Part of the technological platform- Digital India- is expected to provide, integration of various beneficiary databases with Aadhar and appropriate process re-engineering. It would result in:


Meanwhile, the Aadhar (Targeted Delivery of Financial and Other Subsidies, Benefits and Sevices) Bill, 2016. This is a transformative piece of legislation that will benefit the poor and the vulnerable. The statutory backing to Aadhar will address the uncertainty surrounding the project after the Supreme Court restricted the use of the Aadhar number until a Constitution Bench delivers its verdict on a number of cases challenging the mandatory use of Aadhar in government schemes, and rules on the issue of privacy violation.


To ensure targeted disbursement of government subsidies and financial assistance to the actual beneficiaries is a critical component of 'minimum government and maximum governance' of the Government of India. 


After the successful introduction of DBT in LPG, the government in 2016-17 introduced it on a pilot basis for fertilizer in few districts. Similarly, the government has also started the automation facilities of the 5.35 lakh FPS (Fair Price Shops) which come under the PDS (Public Distribution System).


As per the Union Budget 2017-2018, the country has made a strong beginning with regard to DBT with regard to LPG and kerosene consumers- Chandigarh and 8 districts of Haryana have become kerosene free. Besides, 84 Government schemes have also been bordered on the DBT platform. The idea of DBT will also be key to India's transition to a cashless economy-as pointed by the Economic Survey 2015-16 and vindicated in the post-demonetization period.


The Economic Survey 2015-16 suggested the DBT solution for farm loans and interest subvention schemes availed by the farmers. It further advised replacing the existing system of MSP/procurement-based PDS with DBT which will free the market of all controls on domestic movement and import. The present system distorts the concept of a market and needs to be discontinued to enhance productivity in agriculture, as per the survey.

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