An important step in cracking this problem is the linking of Jan Dhan Yojana with Aadhaar, the unique biometric identification system. How prepared is India to tackle the COVID-19 outbreak? Direct Benefit Transfer (DBT) Scheme – Pros and Cons, Direct Benefit Transfer (DBT) Scheme’s aim is to transfer subsides, scholarships and other welfare benefits, directly to the bank accounts of beneficiaries. How to make Direct Benefit Transfers work for the people. However, despite the much hyped ‘Give It Up’ campaign, only 3.6% of consumers actually gave up their subsidy claim. Even official government estimates suggest that a large … Beneficiaries often complain about the PDS problems cited above. In case you can’t find any email from our side, please check the spam folder. In addition to integration of the Jan Dhan Yojana database with the Aadhaar database, DBT will require an aggressive awareness campaign. This will help Indian economy in the long run as the structural expenditure will be reduced. The researchers began by collecting data on existing water quality and pollution control costs for the streams, and assigning feasible uses for each stream, based on existing water quality. Thus, DBT under PAHAL is just a beginning in using DBT as the medium for providing subsidies. This is the experience with the public distribution system (PDS) presently in use to exclude non-poor consumers, a relatively small segment of the consumer base, from access to subsidized foodgrains, kerosene, sugar, etc. Aadhaar is now backed by an Act of Parliament and is reported to have covered virtually the entire population. It’s a win-win for both of us. Sudipto Mundle is emeritus professor at the National Institute of Public Finance and Policy, and a senior visiting fellow at the Centre for Public Affairs and Critical Theory, Shiv Nadar University, New Delhi. Join Mint channel in your Telegram and stay updated with the latest business news. In mature democracies such as India, it is normal that a new government that comes to power continues to implement promising schemes launched by its predecessor. They may open more than one account for each beneficiary for incentive. The provision of around ₹ 20,000 crore for the scheme is about 8% of the total provision of ₹ 250,433 crore for subsidies in the 2016-17 Union budget. E-Learning: A substitute for classroom learning? Unfortunately, the Jan Dhan Yojana programme notwithstanding, banking penetration among the target beneficiaries is still quite limited, especially in rural areas. Switching to the DBT system would cleanly cut away from all these problems. Green Jobs are essential for sustainable development. Afterwords :- What are your thoughts on this topic? However, it is widely reported that bank staff are reluctant to cooperate in opening accounts, especially unprofitable ‘zero balance’ accounts, for poor customers. Despite all this, LPG will remain an uncompetitive fuel alternative for about 50% of such households who continue to depend on firewood, cow-dung patties and other biomass that are essentially free. We use cookies to improve your experience on this blog. The initial outlay required for getting an LPG connection, by way of deposit, cost of a burner, regulator, etc., is another disincentive for low-income households. Thus, the adverse health and ecological consequences of traditional fuels notwithstanding, LPG penetration among this consumer group will remain a challenge. Replacing India's Public Distribution System with Direct Benefit Transfers will improve efficiency, but shouldn't be implemented at the cost of individual choice. This price gap distorts the market, providing opportunities for arbitrage, diversion of supplies and profiteering in the black market. Log in to our website to save your bookmarks. Please turn it off in order to continue, or whitelist Mint. You are now subscribed to our newsletters. An awareness campaign is also necessary about the subsidy scheme in place for low-income households, and how the DBT system works. This remains a major disincentive for adopting LPG as the cooking fuel of choice. Yet, it accounts for only about 3.5% of the total annual flow of government subsidies. The main positive lesson has to do with targeting. With the aim of reforming Government delivery system by re-engineering the existing process in welfare schemes for simpler and faster flow of information/funds and to ensure accurate targeting of the beneficiaries, de-duplication and reduction of fraud Direct Benefit Transfer (DBT) was … You will get good content & we will get a subscriber. This is a sad commentary on the attitude of the rich, and implies that their exclusion from subsidy has to be enforced, not voluntary. Please subscribe to our YouTube channel. Researchers used benefit transfer to estimate the economic benefits of improved water quality. In other words, only 14% of the rich consumers actually ‘gave it up’. When a government provides income support to a beneficiary, this is a pure transfer payment unrelated to the cost of providing any good or service. In contrast, the feedback from those who have access to PAHAL has been quite positive. Feel free to express your opinion in the comment section below. DBT can cut clean from all the abuses of PDS. You seem to have an Ad Blocker on. Enumerate. Let’s see some of them: 1. An elaborate administrative apparatus has to be maintained at huge cost to manage the rationing of subsidized commodities. This scheme eliminates intermediaries and rents for ‘fair price shops’ because subsidies and benefits of welfare schemes are transferred directly. Under this scheme beneficiaries can open bank accounts with zero balance, which helps in financial inclusion. In this system, subsidies are transferred to beneficiaries directly through their bank accounts. They need to be made aware that the humble act of opening an account for poor beneficiaries is, in fact, a critical link in what could become best practice for the largest welfare delivery system in the world. As Aadhar card is based on biometric identification, fake & duplicate beneficiaries will be eliminated, eliminates intermediaries and rents for ‘fair price shops’, As everyone can purchase goods at market price, there will be, healthy competition between the sellers in the market, food grains storage and spoilage in the process can be eliminated, It will help India to transform itself into, Still there are many rural & tribal areas, which, As of now, only 3% Indians pay income tax.