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Direct Benefits Transfer (DBT) – The Game Changer for the Congress ?




A couple of years back, the Congress led UPA Government was in the midst of trying to ensure that there were a number of schemes that would be seen as pro-poor, and would help the Congress party earn brownie points and bragging rights. This would help to ensure that a chunk of voters would be more grateful to the Congress, and would hence vote for the party. As a part of all this, the Government came out with a scheme that legally allowed the Government to provide cash to people, with the noble intention of letting the price of subsidized goods and services reach market level, and the subsidy amount that would normally have been provided to people as a part of the price would be instead directly transferred to their accounts. This scheme was also touted as a way to ensure that leakages in the system were removed, since money would be directly transferred into their accounts. The Congress leadership considered such a scheme as a game-changer, since this would ensure that people got money in their hands and hence would credit the Congress party with the same. And when combined with the Aadhar scheme for accurate identification, what could possibly go wrong ?
However, the party was so gung-ho that the Government neglected several areas of concern that had the potential of tripping up this entire planning (and this seems to be the trend, since any proper auditing of schemes such as the NREGA, Loan Waiver, etc, all show that the Government needs to do far better at execution of such schemes, since many of the intended beneficiaries do not benefit and the leakages in these are beyond the level of criminal). Here are some of the concerns:
– The scale of work is so incredible that one should expect that such a scheme would take years to stabilize, not in the frame of the impending Lok Sabha elections. There was the process of ensuring Aadhar across the country (and there are many slip-ups there), there is the matter of bank branches and free accounts in rural and poorer areas, and ensuring that Aadhar was linked to these (and there was a question over the constitutionality of the Aadhar process and the collection of bio-metric information without legislative approval, which the courts are handling right now).

– By providing money directly, there was scope of abuse, since people would not see the money in their account as happening instead of the subsidies and instead use the money for unintended consequences, such as consumption of liquor.
– There were pilot projects for the DBT in several districts, and apparently the feedback revealed many process improvements that were required, but instead, the Government was so focused on DBT and Aadhar that it did not try to ensure that these improvements / negative points were handled, and hence these same problems would be found at higher levels.

One of the results of all this problem was that apparently, it was becoming clear that the implementation of DBT was not happening as desired and if the Government tried to focus on using DBT as a vote-winner, it would cause more problems than raise votes. The one major area where the DBT was being used was in the case of transfer of subsidy of LPG cylinders, and in a sudden reversal, the Government has decided to stop this process. And this is an indication of yet another problem in the whole Government implementation process – schemes that are supposed to benefit the needy are launched, but there is really no effort taken for the hard and time-consuming part; namely, ensuring that the schemes cause the money to reach the needy and the process has enough safeguards to ensure that there are minimal leakages. I read this article that tries to do some analysis of the DBT as of now, and it does not make for positive reading in any way (link to article):

A year after DBT was implemented, the government has disbursed only about Rs 3,124 crore through this channel, and of this, Rs 2,574 crore was towards LPG subsidy launched in June 2013. If LPG is taken out, total transfers under the scheme would barely stand at Rs 550 crore. This suggests not much was transferred under other schemes meant for students, minorities, labourers and women, among others. The transactions picked up around November-December 2013, when Assembly elections were held in five states.
The seeding of Aadhaar number with bank accounts of beneficiaries was also slow. Though 62 per cent, or Rs 1,915 crore, of the overall amount was transferred on the Aadhaar platform (the rest was through National Electronic Funds Transfer, a payment system facilitating one-to-one transfers) till the end of December 2013, much of this was towards LPG subsidy, carried out entirely through Aadhaar. Of the 4.4 million DBT beneficiaries identified, only 1.9 million (41.86 per cent) have their Aadhaar numbers linked with bank accounts.




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