Direct Benefit Transfer

Direct Benefit Transfer (DBT) was introduced on 1 January 2013 with the main aim of improving the Government’s delivery system and redesigning the current procedure in welfare schemes by making the flow of funds and information faster, secure, and reduce the number of frauds.

Initially, the nodal point for the execution of the DBT programmes, the DBT Mission was designed in the Planning Commission. However, from July 2013 until 14 September 2015, the DBT mission was taken over by the Department of Expenditure. From 14 September 2015, matters relating to the DBT Mission were placed in the Cabinet Secretariat under the Co-ordination & PG Secretary.

The initial phase of DBT was started in 43 districts. However, 78 more districts were included in 27 schemes concerning labour welfare, child, women, and scholarships. There was a further expansion in India with regards to the DBT scheme from 12 December 2014. DBT is present in over 300 districts with the introduction of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and 7 new scholarships. The Indian Government focuses highly on the DBT scheme. DBT brings about accountability, transparency, effectiveness, and efficiency in the Government of India system. The DBT enablers are Jan Dhan, Aadhaar, and Mobile (JAM). Currently, there are about 100 crore mobile connections, more than 100 crore Aadhaar, and 22 crore Jan Dhan accounts who can make use of the scheme.

Definition of Direct Benefit Transfer

The process of directly transferring the subsidy amount and making other transfers directly into the account of beneficiaries rather than providing it to government offices is known as DBT. In this context, transfer can be defined as the payment that the government makes directly to the beneficiary without receiving any returns. Some of the examples of transfers are scholarships and subsidies.

Advantages of Direct Benefit Transfer

The main advantages of DBT are mentioned below:

  • DBT’s main advantage is preventing any frauds. Therefore, the beneficiary receives the funds directly from the government. The beneficiary’s bank account will directly receive the money.
  • With the help of the Aadhaar number, the identification of the beneficiary can be done better. The government will be able to identify the beneficiary with the help of their Aadhaar details since it is a universal ID.

Operating process for Direct Benefit Transfer

DBT process contains a number of sub-processes that are present at different levels. Given below are the sub-processes of DBT:

  • Preparatory steps that must be taken.
  • Public Financial Management System (PFMS) registration.
  • A beneficiary database must be created.
  • Checking the accuracy and validity of beneficiary details.
  • Payments that must be made and setting up of a feedback loop.

Different types of schemes covered under Direct Bank Transfer

Cash transfer: Under this scheme, cash is directly transferred from the government to the individual beneficiaries. The different routes that the transfer from the government to individual beneficiaries occurs in are mentioned below:

  • The beneficiary receiving the amount directly.
  • From the State Treasury Account to the beneficiary.
  • From an Implementing Agency that has been appointed by the government.
  • The beneficiary receives the money from the State or Central Government.

Some of the examples are the National Social Assistance Programme (NSAP) and MGNREGA.

In-kind benefits from the government to beneficiaries: Components of the schemes or the schemes itself are a part of this category. The government provides beneficiaries with in-kind benefits via an intermediate agency. The government usually bears the cost to buy the goods that can be used for public distribution as well as for providing them to the beneficiaries that they have targeted. The beneficiaries then get these services or goods for a very low price or for free.

Other forms of transfers: Incentives, allowances, etc., that are provided to Non-Government Organisations (NGOs) and community workers come under this category. They are provided such allowances because of the service they provide to other beneficiaries and to the community.

Function of Aadhaar under Direct Benefit Transfer Scheme

One of the major achievements of the government is the linking of the Aadhaar number to the DBT scheme. The main aim of linking the Aadhaar number is for the government to make all kinds of payments using this link. It also helps in making sure the right beneficiary receives the payment, and the payment is received directly to the beneficiary’s account. The government also recently announced that LPG subsidy will not be provided for individuals whose yearly income is more than Rs.10 lakh.

Transaction charges for Direct Benefit Transfer and the applicable cash out incentives

On 26 February 2016, the Ministry of Finance released an order that all transactions made by Pratyaksh Hanstantrit Labh (PAHAL) or DBT must be done via the National Payments Corporation of India (NPCI). Banks are paid compensation to help make the process of DBT easy. Given below are the two types of commission that are provided:

  1. Transaction cost: As per the NPCI circular, for each transaction, there is a charge of Rs.0.50 that is levied. The NPCI, destination beneficiaries, and sponsor banks must share the charge.
  2. Cash out incentives: In case of Pension Schemes, Maternity Benefits, and MGNREGA, they have a fixed charge of Rs.5 for every transaction and a variable charge of Rs.0.50 per transaction of Rs.100. This charge is subject to a maximum payable amount of Rs.5. The transaction amount that is made is rounded off to the next hundred. The main aim of offering these incentives is to provide efficient direct delivery of financial services to the final beneficiary.

Direct Benefit Transfer Portal

A portal has been launched by the government ( where all details of the scheme have been mentioned. All state and central welfare schemes can be accessed by administrators on the portal. Any updates or changes on the scheme will be updated on the portal. All the subsidies that are available to beneficiaries can also be accessed by them on the portal.

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