Mains Marathon

Approach:

• Begin by briefly introducing DBT and its core objectives.
• In the body, assess its effectiveness using relevant data, examples, and sectoral impacts, especially in reducing poverty and improving targeting.
• Conclude with a forward-looking note on strengthening DBT further.

Introduction:

India’s Direct Benefit Transfer (DBT) system is a flagship reform that aims to deliver welfare directly to beneficiaries by eliminating intermediaries, curbing leakages, and improving efficiency. Anchored in the JAM trinity (Jan Dhan, Aadhaar, Mobile), it reflects the government’s commitment to inclusive, transparent, and technology-driven governance.

Body:

Significance of DBT:

• DBT Enhances Targeting Efficiency and Inclusion: DBT has expanded welfare coverage significantly, increasing beneficiaries from 11 crore in 2013 to 176 crore in 2024.
  • By eliminating middlemen and directly transferring benefits to intended recipients, DBT ensures that welfare reaches marginalized communities, improving equity and inclusion.
• Significant Fiscal Savings Demonstrate Reduction in Leakages: One of DBT's major achievements is the ₹3.48 lakh crore saved by plugging welfare leakages.
  • By removing ghost beneficiaries and reducing pilferage by intermediaries, DBT has made welfare programs more transparent and accountable.
• Subsidy Rationalisation without Compromising Coverage: DBT has reduced subsidy expenditure from 16% to 9% of total government spending, while expanding beneficiary coverage by 16-fold.
  • This indicates that fiscal resources are being optimized, with better targeting efficiency and without a proportional increase in fiscal burden.
• Welfare Efficiency Index (WEI) Reflects Systemic Improvement: The Welfare Efficiency Index (WEI) rose from 0.32 in 2014 to 0.91 in 2023, showing significant improvements in savings, subsidy reduction, and beneficiary growth.
  • This rise in WEI highlights DBT's role in improving the efficiency and inclusivity of welfare delivery.
• DBT Strengthened Financial Inclusion and Empowered the Poor: DBT has enhanced financial inclusion by linking beneficiaries to Jan Dhan accounts and mobile platforms.
  • This has empowered women, rural populations, and migrant workers, enabling cashless transactions and ensuring accountable welfare delivery.
• DBT Contributed Indirectly to Poverty Reduction: By providing timely and transparent transfers, DBT has increased household liquidity, improved nutrition, and consumption.
  • During COVID-19, DBT helped vulnerable groups weather financial shocks, though its long-term impact on poverty reduction requires further research.

Challenges in DBT Implementation:

• Last-Mile Connectivity and Inclusion Issues: DBT faces challenges such as digital exclusion, especially for elderly and tribal populations in rural and remote areas.
  • Ensuring universal access to bank accounts and mobile phones is essential for effective delivery.
• Authentication Errors and Account Dormancy: Aadhaar-based authentication errors and account dormancy hinder some beneficiaries from receiving timely transfers.
  • Ongoing monitoring and grievance redressal mechanisms are necessary to ensure inclusive access.
• Challenges in Data Accuracy and Coverage: Targeting mistakes can occur due to outdated or inaccurate data.
  • Regular updates of beneficiary information are crucial to ensuring accurate delivery of benefits.
• Dependency on Technology Infrastructure: In regions with weak digital infrastructure, service delivery gaps remain, particularly in rural areas, where connectivity issues persist.
• Inclusion of Informal Workers and Migrants: Migrant workers and informal workers often face exclusion due to lack of formal documentation.
  • Creating systems for temporary registration or similar mechanisms could improve their inclusion.

Conclusion:

DBT has transformed welfare governance by enhancing targeting and saving ₹3.48 lakh crore. It balances fiscal prudence with social inclusion, emerging as a global model. To fully realize its poverty-alleviation potential, focus must shift to improving digital access, financial literacy, and grievance redressal, ensuring inclusive and accountable delivery for all.