[Model Answer QP2022 GS2] Reforming the government delivery system through the Direct Benefit Transfer Scheme is a progressive step, but it has its limitations too. Comment.

With the aim of reforming the Government delivery system by re-engineering the existing process in welfare schemes for simpler and faster flow of information/funds and to ensure accurate targeting of the beneficiaries, de-duplication and reduction of fraud Direct Benefit Transfer (DBT) was started on 1st January, 2013.
DBT has shown promising results in pilot schemes being run in different parts of the country. These include PAHAL (modified DBTL for LPG subsidy), Public Distribution System (PDS) in Puducherry, Chandigarh and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) payments in Jharkhand, Bihar, etc. The programme has already been universalised since February 2015.

Prerequisites for DBT

Key Enabler for DBT: 
JAM Trinity: by leveraging the JAM (Jan Dhan, Aadhaar and Mobiles) trinity and the technological prowess offers to drastically improve the benefit delivery system in the country.

DBT being a progressive step: 

  1. Direct Benefit Transfer lessens the possibility of fraud while accelerating the safe delivery of information and money.
  2. It eliminates the need for middlemen, such as government employees, by sending the subsidy amount directly to the beneficiary accounts.
  3. Transparency is increased, and incidences of theft from central government-sponsored monies being distributed are reduced.
  4. Direct Benefit Transfer ensures precise targeting of beneficiaries.
  5. By linking the fund deposits to their Aadhaar details, beneficiaries will be permitted to join just one bank account, preventing the duplication of subsidies.
  6. It enables the government to communicate with both citizens and program participants at the same time.
DBT and Covid (The report titled ‘Direct Benefit Transfers: Status and Challenges Ahead).

As per the report, in 2020-21, total 179.9 crore beneficiaries received support — 81.9 crore through in-kind benefits and 98 crore via cash transfers.The report pointed out that while most of the DBT payments of centrally sponsored schemes are routed through Aadhaar Payment Bridge and Automated Clearing House, both being NPCI systems, many states still use RBI’s payment systems (NEFT and RTGS) for DBT payments.India’s Direct Benefit Transfer (DBT) programme has helped the government in taking a quick effective response during the unexpected COVID-19 lockdown in 2020, although gaps persist despite the phenomenal coverage of the scheme, according to a report.

DBT and its limitations

  1. Centre-State coordination: Most of the schemes have the state governments playing the main role in implementing the scheme. To ensure there is adequate coordination between the reform plans and state-wise implementation is a significant challenge. The government approach of starting with a small scale, establishing the viability and benefits, and then going national, should help in making the case to the other states.
  2. Partial coverage of Aadhaar: If there is any geography where these direct transfer reforms are implemented, but the Aadhaar enrolment is not universal, some beneficiaries could get temporarily excluded.
  3. Inadequate development of the banking channel: Wherever direct cash transfer is involved, the main role of delivering the transfers is played by the banking channel. There are a few challenges that may impede using the channel for transferring benefits.
    1. Only about half of the population has bank accounts, and the coverage of the banking channel is far from adequate. Majority villages do not have conveniently located banking service points to transact.
    2. The rural banking channels have found it difficult to become viable, and the business correspondents need to be paid an optimal amount to make sure they process the benefits to the beneficiaries in a high quality manner. 
    3. There are infrastructure gaps that impede the development of banking networks in some remote geographies. Connectivity is poor, cash movement is risky, and it is difficult to ensure timely delivery of benefits. 
  4. Challenges in automation of schemes:  Most schemes are presently run on archaic systems, and many do not have it in their DNA to maintain online databases and process the transactions electronically. This poses a considerable challenge not just infrastructure development, but also of training and supporting the staff. This challenge is particularly relevant for schemes where direct transfer of non-cash benefits is being attempted by automating the functioning of the scheme.
    1. For example, if PDS has to implement such reform, it would require not just development of a comprehensive database system to maintain the records, it would also require authentication infrastructure in all the PDS outlets, training those who run these shops, and providing ongoing technical support to them. This is a huge challenge in an existing system
The architecture (of DBT) laid out over the past few years has resulted in a quick effective response during the unexpected COVID-19 lockdown in 2020.

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