dbt (direct benefit transfer) with emphasis to ministry of petroleum

8/13/2019 DBT (Direct Benefit Transfer) With Emphasis to Ministry of Petroleum

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Government of India change of strategy

DBT (Direct Benefit Transfer)Special emphasis to Ministry of Petroleum and Natural Gas

The following study aims at emphasis the Government of Indiasstrategic change in poverty elimination with the introduction of

Direct Benefit Transfer.

Direct Benefit Transfer

I Introduction:

Since independence, Governments in India have been strongly

committed to addressing the issues of poverty and deprivation.

Accordingly, Central and State Governments have devoted amajor share of their budgets to put in place broad-ranging social

safety nets and livelihood assistance programs. The fundamental

objective of these programs has been to provide a basic

minimum quality of life for the vast majority of people who

require social assistance. They make it possible for the poor to

access basic goods and services that would otherwise be

unaffordable.

Governments have been providing various kinds of welfare

assistance and civic infrastructure at subsidized prices. The

annual subsidy disbursement of the Government of India has

increased dramatically in recent years. With large amounts being

spent on subsidies, the Government is examining ways to ensure

that this spending is carried out in ways that maximize positive

outcomes, and lead to significant poverty reductions. Direct

transfer of subsidies to address inefficiencies of present subsidy

disbursement (whether as cash or otherwise) has dominated the

debate in the public policy space for a considerable time.

References:Direct Benefit Transfer of LPG (www.petroleum.nic.in/dbtl/index.htm)Handbook on direct benefit transfer for LPG consumer (DBTL)MOP&NG, GOIDepartment of Food & Public Distribution (http://dfpd.nic.in), GOIInterim report of the task force on Direct Transfer of Subsidies on Kerosene, LPG and Fertilizer -Jun,2011Government of India (2007). Public Distribution System and Other Sources of HouseholdConsumption 2004-2005, Volume I, NSS 61st Round (July 2004June 2005).New Delhi, National Sample Survey Organisation.Government of India (2010). Envisioning a Role of Aadhaar in the Public Distribution System.New Delhi, Planning Commission.Government of India (2011). Interim Report of the Task Force on Direct Transfer of Subsidies onKerosene, LPG and Fertilizer. New Delhi, Ministry of Finance.Government of India (2013). The Economic Survey 2012

13. New Delhi, Ministry of Finance.

Annual Report Financial year 2011-12 of Ministry of Finance available onhttp://finmin.nic.in/reports/AnnualReport2011-12.pdf
http://www.petroleum.nic.in/dbtl/index.htmhttp://dfpd.nic.in/http://dfpd.nic.in/http://www.petroleum.nic.in/dbtl/index.htm


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Technology advances are giving Governments an opportunity to

tailor social spending and redesign schemes to improve

targeting, empower beneficiaries, and reduce poverty at a

household level. The issuance of the Aadhaar number, the

Aadhaar authentication mechanism, widespread data

connectivity especially through mobile phones, and universalcoverage of the population with Aadhaar enabled bank accounts

(AEBA) provides an administrative infrastructure that makes it

possible to implement a direct benefit transfer program.

In 201112 Indias subsidies and under-recoveries for fuel

totaled INR 1.4 trillion (US$27.7 billion) which is not positive for

any emerging economies like India. Total subsidy expenditure

(including for fertilizer and food) was up by 27 per cent on the

previous year, significantly contributing to the rise in fiscal deficit

of 1.3 per cent of the GDP for 201112. As per the estimates the

DBT scheme can result in a net saving of Rs. 33,000 crore ($6

billion) by way of plugging leakages.

Subsidies are costly and contribute to the deterioration of Indiasfiscal balance. Oil companies who bear part of the cost of under-recoveries have less capital to reinvest in exploration, productionor infrastructure. The subsidies create market distortions (e.g.,

more manufacturers producing vehicles that run on diesel) andencourage fuel diversion (e.g., kerosene being used toadulterate diesel, commercial users of domestic LPG) resulting incorruption, black markets and fuel shortages. In addition,subsidies undermine energy efficiency measures and fuelstandards, Exacerbating local pollution and global greenhousegas emissions.

The government has established the Unique IdentificationAuthority of India (UIDAI) to develop the infrastructure for

delivering direct transfers to support the poor. But challengesremain, such as identifying and targeting beneficiaries andincreasing financial inclusion.

Poverty elimination and inclusive growth are the top most

priority for the welfare of every state. To meet these socio-

developmental objectives, a number of Government sponsored

programs and schemes have been introduced. However, there

have been issues associated with the efficiency and effectiveness

of the same. Rampant leakages and corruption have made many

of the schemes and programs dysfunctional. Direct BenefitTransfer to the poor has been aimed to mitigate these malaises.


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II Need for Direct Benefit Transfer:

Recent studies by the Planning Commission have shown that the

Public Distribution System has become so inefficient that 58% of

the subsidized grains do not reach the targeted group andalmost a third of it is siphoned off the supply chain. According to

the Finance Ministry the inefficiencies of the PDS ensure that the

Government is forced to spend Rs.3.65 for transferring of Rs. 1

to the poor.

The idea behind the Direct Benefit Transfer is to cut down

wastage, duplication and leakages and also to enhance

efficiency. The idea is to move to a completely electronic cash

transfer system for the entire population.

III Scope of DBT:

The DBT program aims that entitlements and benefits are

transferred directly to the beneficiaries. The beneficiaries could

include widows, students and pension takers. This would be done

through biometric-based Aadhaar-linked bank accounts. This

would reduce several layers of intermediaries and delays in the

system.

IV Advantages of DBT system: (Social Implication)

The use of Aadhaar or other biometric based systems would

dissolve problems like duplicates or ghosts. Duplicates are when

the name of the beneficiary is repeated and Ghosts is when the

name of a nonexistent beneficiary is mentioned.

It helps in the quick and direct cash transfer to the intended

beneficiary.

The cash transfer happens through a dense Business

Correspondent system on the ground with micro ATMs. This

ensures that the poor get the same level of service that the rich

and the middle classes in the society receive.

The financial inclusion offered by the DBT infrastructure can

also be used by internal migrants to send their remittances.

Approximately, Rs.75,000 crore worth of within-country

remittances are made in India every year. However, seventy per

cent of these remittances are channeled through informal (and

often illegal) channels which impose high costs on them. The


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Aadhaar-based microATM network could ensure that remittances

take place instantly and at much lower cost to migrants.

V - Areas of concern (Practical Implication)

1. Biometric-based unique identity or Aadhaar is leading to

huge problems for people working for the rural employmentguarantee scheme and for others receiving welfare benefits. Not

only have enrolments been done shoddily but the experience of

the pilot projects shows that it is almost impossible to

authenticate the work-hardened fingerprints of the poor.

2. There is also the overwhelming issue of deficient online

connectivity.

3. Some states such as Tripura have opposed the central

governments direct Benefit transfer scheme saying banking was

not available in most villages.

4. Many fear that the direct Benefit transfer in PDS will affect

the system and gives scope to corruption. Rights groups argue

that the decision to stop food grains and introduce cash transfer

in its place is a unilateral decision and unscientific. Instead of

targeted rationing system, they want the government to

universalise the PDS.

5. There are increased chances of money that is transferred into

a female members account being misused by others in the

family.

6. Many NGOs have pointed out the problem of the

Governments decision of ending the public distribution system

of food grain and give money directly to the people without

proper identification of the poor in the country. About 40 per

cent of the poor are still not officially recognised in India

according to many welfare economists.


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VI SWOT Analysis of Direct Benefit Transfer Scheme

VI PESTE Analysis of Direct Benefit Transfer Scheme

1. Political:

The direct Benefit scheme is envisages as a game changer for

government schemes implementation and execution.

Better Segmentation, Targeting and Positioning of thebeneficiaries.

An integrated view of the benefits consumed by a beneficiary

through the various schemes that are active in the State.

Bringing in efficiency, accountability and transparency in the

administration.

Governments endeavor in taking up fundamental reforms

required in Public Distribution System (PDS)

Strength

Worlds largest cash

transfer programme

Cut down on Corruption

Subsidies under various

scheme account for nearly

3.5 % GDP

Cost effective way

Weakness

Less penetration of banking

system in rural parts

Uneven Distribution of

Aadhaar Cards

Faulty Aadhaar Cards

Bridging Aadhaar card with

bank account

Opportunity

Population coverage 1.27

Billions

Expansion of Banking

system in rural india

No Middleman

Huge saving of procedural

saving

Threats

Political Instability

Change in policies

Technology Misuses

Wrong credit to bank A/c

Frauds


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2. Economic:

Creating awareness amongst the beneficiaries/ citizens/

communities about which schemes they are eligible for.

Enable the expediting the verification and approval process for

sanctioning a benefit and facilitate weeding out duplicate

candidates for a benefit.

Time to launch new schemes is lesser

Reduction of intermediary machinery

Avoid Delay & wastage of resources in processes

Cheap & Effective method of transferring funds in long run

3. Social:

Better targeting, bringing in efficiency, accountability and

transparency in the administration of social safety nets.

Measuring the social impacts of the schemes

Stops leakage and pilferage

Financial Inclusion of marginalized section of society

Less of corruption

Deep rooting of Banking System

Timely and direct benefit to the poorer

Deep penetration and vast coverage of government schemes

4. Technological:

Using the latest technology for making DBT possible

Integration of various modules for timely and efficient

disbursement

5. Environmental:

Less of the paper work

Extensive use of technology has reduced overall carbon

footprints


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VII DBTL for Domestic LPG Ministry of Petroleum &

Natural Gas

The countrys current consumption of LPG is approximately

14,000 Thousand Metric Tons (TMT), of which indigenous

production constitutes approximately 68% while the balance is

met by imports. The broad consumption pattern of LPG across

various applications is as follows:

Phase wise approach was adopted for rolling out direct benefit

for consumers of domestic LPG is as under:

Phase I: Cap consumption of subsidized cylinders to all

consumers.

Phase II: Direct transfer of subsidy to consumers in theirAadhaar linked bank account.

Phase III:Direct transfer of subsidy only to a targeted segment

of consumers

Review of Phase I: The Phase I recommendation was

implemented from 14.09.2012 onwards with a cap of 6

subsidized cylinders to each household which was later revised

to 9 subsidized cylinders per household on 17.01.2013.


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25 CS and CSS Schemes (Out of which 17 are Scholarship

Schemes)

8 Departments

43 Districts

16 States/ UTs

16,65,771 beneficiaries

77.5 % Bank Coverage

32.2 % Aadhaar and Bank Account Coverage

4.1 % Seeding

Implementation of Phase II: Government launched DirectBenefit Transfer for LPG (DBTL) scheme for consumers across

the country

78 Districts (44 of Phase I States and 34 of Phase II

States)

121 districts (roughly one fifth of the Country) would be

covered

Additional Schemes - 3 Pensions schemes under Ministry of

Rural Development

Present Status of Transfers under DBT

Exhibit 1

Mode of

Transaction

Data

provided by

No. of

Schemes

under DBT

Transactions in

Volume

Transactions in

Rs. crores

APB NPCI/UIDAI 13 75,342 22.90

OTHER non APB

(including CPSMS)

Concerned

Ministries/ CGA

21 NA# 57.74

Total 80.64


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Status of APB Transfers - Q4

Exhibit 2

Exhibit 3

0

20,000

40,000

60,000

80,000

1,00,000

1,20,000

1,40,000

1,60,000

1,80,0002,00,000

Volume - 26

schemes across

43 Districts

Volume - All

Schemes across

All Districts

7,050 13,059

12,515 43,918

55,777

1,31,558

APB Volumes

March

February

January

Total - 75,342

Total - 1,88,535

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

Value - 26

schemes across

43 Districts

Value - All

Schemes across

All Districts

2.54 3.48

4.46

15.78

15.90

24.17

APB Value (In Rs. Cr.)

March

February

January

Total - 22.90 cr

Total - 43.43 cr


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Exhibit 4

By 01.01.2014 it is envisaged by government of India to cover

nearly half of the country under Direct Benefit Transfer

Phase III (Future Phase), the government of India on

January 01, 2013rolled out the DBT covering seven welfare

schemes in 20 districts in 16 states, and recently it wasproposed to roll out DBTL for LPG for more than 200 districts

covering almost half of the country by 01.01.2014. The LPG

subsidy shall be given to specific categories and for the

remainder of customers, it will be discontinued. Subsidy amount

will be transferred to targeted customers directly as envisaged in

Phase II. Phase III can be implemented only after successfully

completing Phase II. It is expected that in the final phase, with

only targeted customers receiving subsidized LPG, there will be a

considerable reduction in the amount of subsidy outgo for theGovernment.


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Benefits envisaged to various stakeholders

TO LPG CONSUMERS:

LPG Consumers will be empowered as they will be gettingtheir cylinders at the fixed price and receive the subsidy in

cash directly in their bank account without any manual

intervention.

With supply chain having no incentives in diverting the

cylinders, consumers will receive prompt supplies.

There would be an improved availability of new LPG

connections in the market.

As the cylinder supplied is at the market price, competition is

expected to come in, there by more choices of buying pointswill emerge which will bring in better consumer service.

TO OIL MARKETING COMPANIES (OMC):

OMC may experience reduction in administrative efforts due

to targeted delivery of subsidy leading to:

Lesser policing of supply chain activities.

Reduction in number of grievances related to unauthorized

usage, diversion and delayed deliveries.

Public auditing of Subsidy administration through

Transparency Portal.

Shift of focus from distributor administration to consumer

management leading to emergence of ways to serve

consumers better with focused initiatives.

Improved quality of consumer database on the basis of

Aadhaar which can be leveraged for better analysis of

consumer needs and thus improved services.

Improvement of consumer services may result in better

consumer satisfaction.

Aadhaar based de-duplication will help in getting rid of

multiple connections / fake & ghost LPG consumers.

Elimination of chances of artificial product shortage.

TO GOVERNMENT OF INDIA:

Launch of DBTL will reduce subsidy burden due to following

factors:

Elimination of supply chain leakages and thus unauthorized

usage.


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Bringing in a segment of consumers opting out of subsidy,

and

Reduction in diversion by consumers by way of Aadhaar

based De-duplication of multiple connections.

Targeted subsidy delivery and there by satisfaction of LPGconsumers as the supply chain does not have any incentive

in diverting the product.

Elimination of diversion and losses due to supply chain

leakages may lead to reduction in the grievances / queries

which may provide Government with bandwidth to improve

policies and guidelines.

Opportunities to open up domestic LPG sector for policy

initiatives in improving competitiveness and there by better

consumer service.

Eligible Consumers under DBTL Scheme

Consumers in Domestic household Category who are

currently getting domestic 14.2 Kg and 5 Kg cylinders are

eligible to receive subsidy in their bank account to the extent

of the quota of 9 cylinders per financial year fixed by

Government of India.

Those consumers who have linked Aadhaar with LPG

consumer data base and Bank account (CTC) will be eligible

to get the subsidy in their bank account from the date of

launch.

Non CTC (NCTC) Consumers will become eligible from the

date they complete the process of linking their Aadhaar with

LPG consumer number and bank account (i.e. become CTC).

For Reticulated and Non Domestic Exempted Category

consumers detailed guidelines will be issued in due course.

However till such guidelines are issued they will receive the

cylinders upto the quota at subsidized rates.

In-eligible Consumers under DBTL Scheme

Ineligible consumers include (any one or more of the following)

Consumers not having Bank account.

Consumers not having Aadhaar number.


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Consumers who have not linked Aadhaar number with Bank

Account (i.e. NCTC).

Consumers who have not linked Aadhaar number with LPG

Consumer Number (i.e. NCTC).

PROCESS OF CASH TRANSFER

A provision to link Aadhaar number in the LPG consumer

database is available in the OMC software through authorized

process. The distributor is authorized to update the Aadhaar

number and verify the same.

Any modification / corrections thereafter, if any, can be done

by Sales Officers only.

Aadhaar number change is applicable as and when a namechange takes place for regularization of a consumer. Aadhaar

number updation will have to be done after Aadhaar de-

duplication.

In case a consumer is having more than one connection even

in two households at different address, he will receive

subsidy only in one household.

In order to know whether a consumer has become CTC the

OMCs get confirmation on Aadhaar linking in Banks through

an automated system of checking Aadhaar availabilitythrough National Payment Corporation of India (NPCI)

provided Aadhaar mapper on a regular basis.

At the end of each day after delivery confirmation, system

centrally generates a file based on refill orders received for

the first time after launch of DBTL scheme in the district and

sends to Sponsor Bank (presently SBI) for transfer of

advance amount without any manual intervention.

Similarly, at the end of each day, system centrally generates

a file based on refill orders delivered and systemically sends

to Sponsor Bank (presently SBI) for transfer of subsidy

amount without any manual intervention.

NPCI managed Aadhaar Payment Bridge (APB) transfers the

cash normally on the next working day to the bank account

of the consumers.


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VI Direct Benefit Transfer System How other countries

are doing?

Exhibit 5 below compares the other countries which are currently

engaged in direct benefit transfer

Exhibit 5

VII Direct Benefit Transfer System for LPG Customer -

Transforming governance through innovative technology

The solution architecture for direct transfer of subsidies consists

of a Core Subsidy Management System (CSMS). The concept issimilar to the Core Banking Systems (CBS) implemented by

almost all large banks today.

While the CSMS automates all business processes related to

direct subsidy transfer, the specific policies and business rules

will continue to be framed by the policy makers in the Ministry of

Petroleum & Natural Gas. The CSMS maintain the subsidy

accounts of all beneficiaries, and all policies related to subsidy

management. The CSMS is capable to support all forms of direct


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transfers of subsidies such as non-cash transfers, conditional

cash transfers, direct cash transfers, etc.

In addition to maintaining the subsidy accounts, it also integrate

with a number of other external systems of other Government

Departments, partners, and service providers to effectively

monitor the scheme, and ensure the desired quality of service.

Exhibit 6

The CSMS (Exhibit 6) will contain the following modules, some of

which may need to integrate with external systems. The basic

modules of CSMS include:

1. Business Rules Engine

2. Beneficiary and family identification module (Aadhaar

integration)

3. Product movement and stock tracking module (ERP systems

integration)

4. Direct subsidy transfer module (Integration with nodal bank

and payments gateway)

5. Transparency module (Data.gov.in integration)


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6. Contact Centre module

7. Training, education, and outreach module

8. Logistics module

9. MIS Module

10. Module to integrate with other subsidy management systems

Methodology of Scheme:

Exhibit 7 (a)


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Exhibit 7 (b)

A CSMS for LPG is implemented as described in Exhibit 7(a). The

basic solution architecture for subsidy administration and direct

cash transfer is worked out based on single pricing and proper

authentication models for customers who receive subsidy either

as product or as cash. The model also consider direct customerand stakeholder involvement through relationship building

elements including customer empowerment via customer

education, transparency web-portal, grievance redressal etc.

With the following facets as the backbone, domestic LPG delivery

system can be revamped:

1. Every customer (to receive subsidized LPG) will have an

Aadhaar

a) Aadhaar numbers of beneficiaries will be verified beforeseeding the database to eliminate ghost connections

/registrations

b) In order to have a wider base to eliminate duplicates, the

databases of all OMCs will be pooled together. The combined

database will be used for de-duplication

2. While delivering LPG, the Aadhaar number of the customer or

his/her family members will be verified in order to disable

unauthorized persons from receiving subsidized cylinders


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3. Single price and direct subsidies will further remove the

incentive for unauthorized deliveries

In the process shown below (Exhibit 8):

1. LPG cylinders are booked by customers

2. The order details are entered in the booking system

(software) of the distributor

3. The delivery list for a delivery boy is transferred to handheld

device

4. At the time of delivery, the device captures the authentication

data from the customer

5. The device sends the authentication data to the authenticationservice provider to facilitate the transaction

6. The authentication service provider responds to the request

received, completing the verification and enabling (or

preventing) the delivery

7. The delivered data is transferred back to the distributor

software

Exhibit 8


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The cash will be directly transferred to the Aadhaar linked bank

account of the customers. At the onset, each customer entitled

for subsidized LPG will be given one unit of subsidy in cash

directly in his/her bank account. Subsequently, when the LPG

cylinder is sourced and received through the authentication

route, additional units of subsidy will be credited to the bankaccount.

VIII Inferences and Recommendations

The government has been incurring a very high subsidy bill on

petroleum products. Although intended for certain specific

objectives, the prevailing subsidy schemes and their delivery

mechanisms have not been able to meet the intended objectivesand beneficiaries. Based on the figures for last year alone, the

cost of subsidizing these fuels is more than INR 1,38,000

(US$26.95 billion). In addition to this, losses are incurred on

leakages, foregone excise and tax revenue and excessive fuel

consumption. Each year that this problem is not addressed, the

losses remain high.

In this short term period, there is a requirement of more widely

distributed pilot studies, carrying out cost-benefit analyses andcapping the consumption of subsidized LPG cylinders. And in

long term period it is recommended to have improvements in

the mechanism of cash transfer schemes, including indexing

payments to price-level changes, increasing financial inclusion,

decontrol of LPG prices, an improvement in the supply chain of

LPG and designing better BPL surveys to reduce errors of

identification of beneficiaries. The state governments will have to

play an active role in administering pilot projects for distributing

subsidies through cash transfers. In order to encourage states toexpedite the process, financial assistance from the centre and

other incentives should be provided for state governments.


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Abbreviations and Definitions

APB AADHAAR PAYMENT BRIDGE

ARS AADHAAR REGISTRATION SHEET

BPCL BHARAT PERTOLEUM CORPORATION LIMITED

BPL BELOW POVERTY LINE

CTC CASH TRANSFER COMPLIANT (AN LPG CONSUMER WHO HAS LINKEDHIS/HER AADHAAR NUMBER TO BOTH LPG CONSUMER NUMBER AND TO

THE BANK ACCOUNT IS CALLED CASH TRANSFER COMPLIANT (CTC)

CONSUMER)

DBTL DIRECT BENEFIT TRANSFER FOR LPG CONSUMER

DC DISTRICT COLLECTOR

DFS DEPARTMENT OF FINANCIAL SERVICES

DGM DEPUTY GENERAL MANAGER

DS DEPUTY SECRETARY

ED EXECUTIVE DIRECTOR

EID ENROLLMENT IDENTIFICATION

ERP ENTERPRISE RESOURCE PLANNING

GM GENERAL MANAGER

GOI GOVERNMENT OF INDIA

HPCL HINDUSTAN PETROLEUM COMPANY LIMITED

IEC INTENSIVE EDUCATION CAMPAIGN

IOCL INDIAN OIL CORPORATION LIMITED

IS INFORMATION SERVICES

IVRS INTERACIVE VOICE RESPONSE SYSTEM

JS JOINT SECRETARY

LDM LEAD DISTRICT MANAGERS FOR BANKS

LPG LIQUIFIED PETROLEUM GASMIS MANAGEMENT INFORMATION SYSTEM

NCTC NON CASH TRANSFER COMPLIANT (AN LPG CONSUMER WHO HAS NOTLINKED HIS/HER AADHAAR NUMBER TO EITHER LPG CONSUMER OR BANK

ACCOUNT OR BOTH LPG CONSUMER NUMBER AND BANK ACCOUNT IS

CALLED NON CASH TRANSFER COMPLIANT (NCTC) CONSUMER

NIU A NATIONAL INFORMATION UTILITY (NIU) IS A COMPANY WITH PUBLICAND PRIVATE OWNERSHIP SET UP FOR THE PURPOSE OF DEVELOPING,

MAINTAINING, AND EXECUTION OF COMPLEX IT PROJECTS IN

GOVERNMENT. THE NIU FRAMEWORK WAS DESCRIBED IN REPORT OF

THETECHNOLOGY ADVISORYGROUPFOR UNIQUE PROJECTS (TAGUP)

NPCI NATIONAL PAYMENT CORPORATION OF INDIA

OMC OIL MARKETING COMPANY

PMO PRIME MINISTER OFFICE

POA PROOF OF ADDRESS

POI PROOF OF IDENTITY

PPAC PETROLEUM PLANNING AND ANALYSIS CELL

RASF REMOTE AADHAAR LINKING FRAMEWORK


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Teaching notes

Subject areaThe case focuses on Government of India change of strategy DCT (Direct Cash

Transfer) Special emphasis to Ministry of Petroleum and Natural Gas. This is

undertaken by employing the usage of SWOT analysis, PESTE analysis.

Question1. What is Direct Benefit Transfer Scheme?

Direct cash transfer is the direct transfer of government subsidies and other

benefits to the entitled people usually provided by the government. In India, the

UPA government has introduced the scheme to reach out to poor people directly

in order to plug leakages and cut delays in transfer of subsidies to the poor.The

areas that would be covered by the program include scholarships, pensions and

unemployment allowances and later MNREGA and Public Distribution Schemes.

It is assumed that it will help to bypass corrupt middlemen, would help in cutting

down wastage and duplication. It is fundamentally being established to ease theburden of subsidies and letting the genuine beneficiaries avail the advantage.

Question2. What are the benefits to Government?

Launch of DBTL will reduce subsidy burden due to following factors:

Elimination of supply chain leakages and thus unauthorized usage.Bringing in a segment of consumers opting out of subsidy, andReduction in diversion by consumers by way of Aadhaar based De-duplication

of multiple connections.

Targeted subsidy delivery and there by satisfaction of LPG consumers as thesupply chain does not have any incentive in diverting the product.Elimination of diversion and losses due to supply chain leakages may lead to

reduction in the grievances / queries which may provide Government with

bandwidth to improve policies and guidelines.

Opportunities to open up domestic LPG sector for policy initiatives inimproving competitiveness and there by better consumer service.

Question3. What are the social Implication of Direct Benefit Transfer?

The use of Aadhaar or other biometric based systems would dissolve problems

like duplicates or ghosts. It helps in the quick and direct cash transfer to the

intended beneficiary. The cash transfer happens through a dense Business

Correspondent system on the ground with micro ATMs. This ensures that the

poor get the same level of service that the rich and the middle classes in the

society receive. The financial inclusion offered by the DBT infrastructure can also

be used by internal migrants to send their remittances. The Aadhaar-based

microATM network could ensure that remittances take place instantly and at

much lower cost to migrants.

Question4. What are the areas of caution?

Biometric-based unique identity or Aadhaar is leading to huge problems forpeople working for the rural employment guarantee scheme and for others

receiving welfare benefits. Not only have enrolments been done shoddily but the


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experience of the pilot projects shows that it is almost impossible to authenticate

the work-hardened fingerprints of the poor. There is also the overwhelming issue

of deficient online connectivity. Some states such as Tripura have opposed

the central governments direct cash transfer scheme saying banking was not

available in most villages. Many fear that the direct cash transfer in PDS will

affect the system and gives scope to corruption. Rights groups argue that the

decision to stop food grains and introduce cash transfer in its place is a unilateraldecision and unscientific. Instead of targeted rationing system, they want the

government to universalise the PDS. There are increased chances of money that is

transferred into a female members account being misused by others in the family.

Many NGOs have pointed out the problem of the Governments decision

of ending the public distribution system of food grain and give money directly to

the people without proper identification of the poor in the country.

Case overview

Direct Benefit TransferA game changer

To meet the socio-developmental objectives of poverty elimination and inclusive

growth, a number of Government sponsored programs and schemes have been

introduced. However, efficiency and effectiveness have not been achieved by any

of the programs and schemes optimally. Rampant leakages and corruption have

made many schemes dysfunctional.

Direct Benefit transfer scheme has been aimed to mitigate these malaises. Direct

Benefit transfer scheme aims to reduce leakages, cut down corruption, eliminate

middlemen, target beneficiaries better and speed up transfer of benefits to eligible

individuals. This paper examined the various aspects of direct cash transfers, the

need to direct cash transfers, the benefits to all stakeholders like Government,Marginalized class. It also covers the extensive use of technology to achieve the

goal.

About the Authors

Nagender Singh Yadav(S-46) working as Deputy Director (IT) in Ministry of Petroleum and

Natural Gas, PPAC, Govt. of India

dbt (direct benefit transfer) with emphasis to ministry of petroleum

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