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21 Feb 2025
GS Paper 2
Polity & Governance
Day 71: How effective are Direct Benefit Transfer (DBT) schemes in improving the outcomes of welfare programs? Analyze their advantages and limitations. (250 Words)
Approach
- In the introduction briefly define Direct Benefit Transfer (DBT).
- Discuss the advantages and limitations of DBT.
- Substantiate points with some data and facts.
- Conclude suitably.
Introduction
The Direct Benefit Transfer (DBT) system, launched in 2013, aims to enhance efficiency, transparency, and accountability in welfare delivery by transferring subsidies directly to beneficiaries' bank accounts. It has significantly reduced leakages and improved targeting, but challenges like exclusion errors, banking infrastructure gaps, and digital divide persist.
Body
Advantages of DBT in Improving Welfare Program Outcomes:
- Eliminates Middlemen and Leakages: The government's initiative to remove ineligible beneficiaries from various schemes led to savings of approximately ₹3.35 lakh crore between FY18 and FY24.
- Enhances Transparency and Accountability: MGNREGA wage payments via DBT reduced delays and pilferage by eliminating manual disbursement.
- Promotes Financial Inclusion: PMJDY facilitated 54.58 Crore Jan Dhan Accounts have been opened, improving direct access to welfare benefits.
- Reduces Administrative Costs: PM-KISAN ensures timely ₹6,000 annual payments to 11.8 crore farmers, bypassing intermediaries.
- Encourages Women Empowerment: PM Matru Vandana Yojana & Ujjwala Yojana directly transfer benefits to women's accounts, improving household financial security.
- Supports Better Targeting: NSAP (pension scheme) ensures funds reach genuine beneficiaries, reducing corruption in social security programs.
Limitations and Challenges of DBT in Welfare Programs:
- Exclusion Due to Digital Divide: Rural and marginalized groups lack digital access, limiting DBT’s reach in tribal and remote areas.
- Aadhaar-Linked Authentication Issues: Fingerprint authentication failures lead to denial of benefits, affecting the elderly and laborers.
- Banking and Last-Mile Connectivity Issues: Poor banking infrastructure in remote areas forces beneficiaries to travel long distances for withdrawals.
- Mismatch in Beneficiary Data: Errors in Aadhaar seeding and KYC mismatches delay fund transfers.
- Cash Transfer Does Not Ensure Service Delivery: PDS shift to DBT in some states led to lower food security, as cash was not always used for essentials.
- Lack of Financial Literacy: Many beneficiaries struggle with banking and digital transactions, creating dependence on middlemen.
- Delays in Fund Disbursement & Grievance Redressal Issues: PM-KISAN delays impact farmers' seasonal needs, and redressal mechanisms remain weak.
Conclusion
DBT has enhanced efficiency, reduced leakages, and improved targeting. However, exclusion errors, Aadhaar-linked issues, and banking gaps hinder its full potential. Strengthening rural banking, digital literacy, and grievance redressal while adopting a hybrid model (cash + in-kind transfers) can ensure more inclusive and effective welfare delivery.
