Opinion – Is Direct Benefit Transfer the way to go?

The Economic Survey projects the JAM trinity as the tool to “wipe every tear from every eye”. This JAM trinity corresponds to Jan Dhan Yojana, Aadhaar Number and Mobile linking to facilitate the Direct Benefit Transfer (DBT). DBT is being touted as the panacea to the social security woes of the people of this country. However, there is another side of the story  which also needs to be told.

DBT offers the benefits of minimising leakages and corruption, greater coverage and better targeting – all of which will improve the efficiency of the public spending on subsidies. This will help in promoting the fiscal discipline of the government, which it has not been able to follow for various reasons (like the never ending postponement of fiscal deficit targets of FRBM Act). This will also advance financial inclusion to some extent and will cause minimum distortion to the market forces. For example, if DBT replaces the Public Distribution System (PDS) then trade distortion in food grains market will be reduced. Thus DBT is certainly desirable.

But, its implementation has several challenges like poor financial inclusion and unfavorable social attitudes. While the problem of financial inclusion may now be easily addressed with the progress made through Pradham Mantri Jan Dhan Yojana and Aadhaar scheme, the problem of social attitudes still loom large. For example, pregnant women and children are some of the important beneficiaries of the PDS through programmes like Janani Suraksha Yojana and Integrated Child Development Services (ICDS) respectively. Thanks to these efforts that the nutritional requirements of women and children are being met to a large extent, if not fully. Now if we move away from PDS and towards DBT in a society which still doesn’t consider the nutrition of women (especially pregnant) and children (especially girls) as important, then it may prove counter productive with respect to the progress achieved so far. The transferred funds may no longer be used for intended purposes.

This makes it imperative that though the DBT is all the more desirable, it must be allowed in a gradual manner and must be accompanied by social awareness campaigns that would make these DBT transferred funds to be used for their intended purposes. It must be first allowed in those sectors where such social challenges do not exist – like in the case of LPG cylinders, and must be accompanied by social awareness campaigns in areas where the social challenges do exist.


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