Direct Benefit Transfer Schemes

Why in news?

  • Recently, International Monetary Fund (IMF) has praised India’s Direct Benefit Transfer (DBT) Scheme as a “logistical marvel” that has reached hundreds of millions of people and especially benefitted women, the elderly and farmers.
  • Earlier, David Malpass, President of the World Bank Group, had also urged other nations to adopt India’s move of targeted cash transfer instead of broad subsidies noting that “India managed to deliver food or cash support to a remarkable 85 per cent of rural households and 69 per cent of urban households”.

About Direct Benefit Transfer-

  • In January 2013, The Government of India launched the Direct Benefit Transfer or DBT scheme to streamline the transfer of government-provided subsidies in India.
  • The Government introduced the scheme with an aim of enhancing the delivery system and redesigning the existing procedures in welfare schemes.
  • DBT seeks to transfer subsidy benefits from several Indian welfare schemes directly into the beneficiaries’ bank accounts.
  • To avail of the DBT benefits, beneficiaries must ensure they link their bank account to their Aadhaar number.
  • Since the inception of the DBT scheme, the Government has launched 450 projects and reached more than 900 million people.

 Factors that contributed to the success of DBT-

  • Inclusive financial sector system where the most marginalised sections of society have been uniquely linked to the formal financial network.
  • Mission mode approach- In a mission-mode approach, the government strived to open bank accounts for all households, expanded Aadhaar to all, and widens the coverage of banking and telecom services.
  • Public Finance Management System and developed the Aadhaar Payment Bridge to enable instant money transfers from the government to people’s bank accounts.
  • Aadhaar-enabled Payment System and Unified Payment Interface further enlarged interoperability and private-sector participation.
  • An enabling policy regime, proactive government initiatives and supportive regulatory administration permitted the private and public sector entities in the financial sector to overcome longstanding hurdles of exclusion of a large part of the population.

Challenges for successful implementation of DBT-

  • Complex and multi-layered governance machinery.
  • India’s diversity.
  • Access barriers, and
  • Digital divide.

Implementation of DBT scheme- The DBT scheme started as a pilot in 2013-14.

  • Rural sector-
  • Effective and transparent financial assistance- DBT has permitted the government to supply financial assistance effectively and transparently to farmers with less transaction costs.
  • Agricultural scheme – Be it for fertilisers or any of the other schemes including the PM Kisan Samman Nidhi, PM Fasal Bima Yojana, and PM Krishi Sinchayi Yojana, benefits from the DBT thus became the backbone for assisting the growth of the agricultural economy.
  • MGNREGA- The benefits received under the Mahatma Gandhi National Rural Employment Guarantee Act and Public Distribution System (PDS) drive the rural demand-supply chain.
  • Urban India-
  • PM Awas Yojana and LPG Pahal scheme successfully use DBT to transfer funds to eligible beneficiaries.
  • Several scholarship schemes and the National Social Assistance Programme use the DBT architecture to provide social security.
  • DBT under rehabilitation programmes like the Self Employment Scheme for Rehabilitation of Manual Scavengers opens new frontiers that enable social mobility of all sections of society.
  • During pandemic- The efficacy and rigidity of the DBT network assisted the government to reach the last mile and support the most deprived in bearing the brunt of the lockdown.
  • From free rations to approx. 80 crore people under the Pradhan Mantri Garib Kalyan Yojana, fund transfers to all women Jan Dhan account holders and support to small vendors under PM-SVANidhi, DBT supported the vulnerable to withstand the shock of the pandemic.

Benefits of Direct Benefit Transfer-

  • DBT transfers help accelerate the flow of funds and information securely while decreasing the possibility of fraud.
  • It removes the need for intermediaries, including government officers, in transferring the subsidy amount directly into the beneficiary accounts.
  • It brings about transparency and lessens instances of pilferage from the distribution of Central Government-sponsored funds.
  • It also ensures accurate targeting of beneficiaries.
  • Beneficiaries can link only one bank by seeding the fund deposits to their Aadhaar details to avoid duplication of subsidies.
  • It enables the Government to simultaneously reach out to both citizens and beneficiaries of the scheme.


  • Direct Benefit Transfer has transformed the welfare aspect of the governance. Going forward digital and financial literacy, strong grievance redressal, improving awareness and an empowering innovation system are some of the aspects that would need continued focus. This would play an important role for India in meeting the diverse requirements of its population and ensuring balanced, equitable and inclusive growth.

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