Home Essay/Articles ARTICLE: Direct Benefits Transfer -- Things You Must Know
ARTICLE: Direct Benefits Transfer -- Things You Must Know
Friday, 04 January 2013 04:11

Direct Benefits Transfer -- Things You Must Know

1. What exactly is the Government of India proposing to do under the Direct Benefits Transfer (DBT) System?

• The DBT system aims that entitlements and benefits to people can be transferred directly to them through biometric-based Aadhaar-linked Bank accounts, thus reducing several layers of intermediaries, points of leakage and delays in the system.

• Every resident will have an Aadhaar number (based on biometrics, i.e., their unique fingerprints) that will be linked to their bank account, and the money will go directly from the government into their bank account.

• The last-mile of the initiative is the most important – the system will allow disbursements to take place at the doorstep of the beneficiaries through a dense network of business correspondents (BCs) – agents of the banks who will make the payments to people using biometric based microATM machines.

• It is a new system, not a new scheme. It aims to make the payments under existing government schemes – pensions for elderly/widows/disabled, scholarships for students, MGNREGA wages, payments for Janani Suraksha Yojana, payments to ASHA and anganwadi workers etc. – reach people faster and more efficiently.

• The yardstick of success is not going to be that the money has reached a bank account, but that it has reached the hands of the intended beneficiary—a student, a pensioner, a widow, an elderly, a disabled person, a poor family.

2. In what ways will this system help the aam aadmi?

• First, the Aadhaar and the use of biometrics (mainly recognition of a person through his unique fingerprints) will ensure that the right person gets the payment. It will address the problem of ‘duplicates’, i.e., the same person getting the benefit more than once, and ‘ghosts’, i.e., a non-existent person getting the benefit, are addressed.

• Second, it will ensure that the money reaches the beneficiaries directly, on time and in full amount. For example, pensions, which reach the beneficiary once every 4-6 months in many parts of India, can now reach her bank account on the first of every month.

• Third, it will ensure that money reaches the doorstep of the beneficiary. A dense network of business correspondents (BCs) on the ground with microATMs will allow payments to happen near where people are – in kirana stores, in Panchayat offices, in schools, at home – and not only at bank branches, ensuring that the poor get the same level of service that the rich and middle-class in India get.

• Fourth, as it is based on an open architecture, state governments can also use this platform. This is important as the states will have a critical role to play.

• Fifth, migrants to cities such as construction workers will be able to use the system to send money to their homes. The Aadhaar-based microATM network can ensure that remittances take place instantly and at much lower cost to migrants.

3. How are we addressing the challenges of implementation of such an ambitious scheme?

Implementation is no doubt a challenge. That is why the government is proposing to move ahead only gradually and with caution. The following steps are being put in place.

• First, the programme proposes only a modest beginning in Phase I, covering approx 34 schemes – largely scholarships, pensions, and other benefit payments - in 43 districts. Only based on the learnings from this phase, will the programme be expanded.

• Second, a system of concurrent evaluation is being embedded, to ensure that we get objective feedback from the ground, and based on these learnings, make improvements.

• Third, the issue of mobile connectivity, a major challenge in backward areas and essential for online authentication that Aadhaar requires, is being addressed in parallel, by adding more mobile towers (especially in backward districts) and through the ambitious government programme of taking broadband internet connectivity to every Panchayat within 2 years.

• Fourth, the existing business correspondent (BC) model is being changed, which would enable anyone – kirana shops, women’s self-help groups, primary agricultural cooperative societies, post offices, ASHA and Anganwadi workers, etc. – to become BCs, so that a large number of people can serve the people as agents of the banks and make payments

• The post office network (a key payment channel, especially for pensions and MGNREGA payments) is also being reformed with the postal department committing to upgrade to a core banking solution (CBS) system across all its post offices within the next 18 months.

4. Many allegations are being spread about this programme, for example, that this is a bribe to the common man to win votes? Is this correct?

Many baseless allegations are being leveled by the opponents of the programme. As the Finance Minister noted at his press conference, it is absurd to call this a bribe. Can ensuring the payment of benefits to the common man, to which he/she is entitled as a right, be called a bribe? In fact it shows the government’s commitment to the cause of the aam aadmi and the poor who have to suffer greatly in receiving their due payments on time and in the full amount. The new system is an advancement of the UPA government’s Rights-based Approach, which aims to guarantee benefits to people as their right – Right to Information, Right to Work (MG-NREGA), Right to Education have already been enacted. Right to Food (National Food Security Bill) is at an advanced stage. The Direct Benefits Transfer is a Right to Benefits that continues in this system of providing rights to the people.

5. Will this reduce the subsidies for the common man?

No. Subsidies are not being reduced. This is a system to ensure than existing subsidies and payments reaches the right person on time, in the full amount, and at their doorstep. In fact, because payments will happen directly to beneficiaries, and many layers of intermediaries will be cut out, it is likely that people will get more, rather than less, as leakages will be reduced.

6. Are we replacing the PDS/ Government run Ration Shops? Are food and fertilizer covered in this programme?

No. The PDS/Government run ration shop is not being replaced. It will remain as it is. The government has made it clear that subsidies on food and fertilizer are not being included in the first phase of this initiative, recognizing that these are highly complex and require considerable thought. Incidentally, chief ministers seem to have varying views on this issue, with some supporting the linking of programme with fertilizer and food (and other PDS commodities), while others opposing it.

The government has also made it clear that it is fully committed to passing the National Food Security Bill, which is a major commitment of the UPA government.Page 5 of 12

7. What is the timeline for this programme?

• In the first phase, 43 districts in 18 States and UTs of India are being taken up. Phase I will begin on January 1, 2013. Approx 34 schemes are being taken up – largely schemes where payments are already made to bank accounts of beneficiaries. Over the next few months, other schemes will be added.

• We are hopeful that within the next 12 months, the direct cash transfer programme can be launched across the country. The plan is to start roll out across all districts in 18 States and UTs beginning April 1, 2013, and remaining 17 States and UTs from June 1, 2013

8. How is the programme being implemented and monitored?

• The programme is being monitored by a National Committee headed by the Prime Minister himself. All major cabinet ministers and secretaries are part of this committee.

• There is also an Executive Committee, led by the Principal Secretary to the Prime Minister to manage the implementation of the programme. Every Ministry has also formed an implementation committee.

• State governments, UIDAI, and all Banks will also have an important role to play in the successful implementation of the programme

• A meeting of all the District Collectors of the 51 districts is being called to discuss issues and enable smooth implementation

• A concurrent evaluation system is being put in place to gather feedback

• A grievance redressal system is also being put in place to address the problems faced by people during implementation.

Last Updated on Friday, 04 January 2013 04:24