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In a recently issued order, the Ministry of Labour and Employment has directed the State Welfare Boards (SWBs) not to distribute articles and household items to the BOC workers and instead provide monetary assistance through Direct Benefit Transfer (DBT) into the workers’ bank accounts.


GS-II: Social Justice (Issues relating to the development and management of Social Sector/Services), GS-II: Polity and Governance (Policies and interventions for Transparency & Accountability in governance)

Dimensions of the Article:

  1. What is Direct Benefit Transfer (DBT)?
  2. Categories of Schemes covered under DBT
  3. Advantages of DBT
  4. Disadvantages od DBT
  5. Why is DBT recommended for Building and Other Construction (BOC) Workers now?

What is Direct Benefit Transfer (DBT)?

  • In the Direct Benefit Transfer (DBT) program benefit or subsidy is directly transferred to citizens who eligible to receive the support.
  • The primary aim of this Direct Benefit Transfer program is to bring transparency and terminate pilferage from the distribution of funds sponsored by the Central Government of India.
  • The Central Plan Scheme Monitoring System (CPSMS), being implemented by the Office of Controller General of Accounts, acts as the common platform for routing DBT.

There are more than 300 schemes under DBT and DBT has shown promising results in pilot schemes being run in different parts of the country, which include:

  1. Pradhan Mantri Fasal Bima Yojana (PMFBY),
  2. National Food Security Mission (NFSM),
  3. Pradhan Mantri Krishi Sinchai Yojana (PMKSY),
  4. Atal Pension Yojana (APY),
  5. Pradhan Mantri Vaya Vandana Yojana (PMVVY),
  6. Pradhan Mantri Matsya Sampada Yojana (PMMSY),
  7. Pradhan Mantri Kisan Sammann Nidhi (PM-KISAN),
  8. Deendayal Antyodaya Yojana – National Rural Livelihood Mission (DAY-NRLM),
  9. Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) and
  10. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) payments in Jharkhand, Bihar, etc.

Categories of Schemes covered under DBT

The scope of DBT include all welfare/subsidy schemes operated by all the Ministries/ Departments of Government of India directly or through implementing agencies, which involve cash / kind benefits’ transfers to individuals.

  1. Cash Transfer to Individual Beneficiary – This category includes schemes or components of schemes wherein cash benefits are transferred by Government to individual beneficiaries. Example PAHAL, MGNREGA, NSAP etc.
  2. In-kind Transfer from Government to Individual Beneficiary – This category includes schemes or components of schemes wherein kind benefits are given by the Government to individuals through an intermediate agency.
  3. Other Transfers – Apart from these two categories of schemes, there is another category of transfers from the government to different non-government functionaries who help in facilitation of various government schemes till the last mile. This category includes transfers made to the various enablers of government schemes like community workers, NGOs, in the form of honorarium, incentives, etc. for successful implementation of the schemes.

Advantages of DBT

  1. Middlemen will be eliminated in the due course of transfer of benefits. Hence “leakages” in transfer of funds will be reduced.
  2. As Aadhar card is based on biometric identification, fake & duplicate beneficiaries will be eliminated.
  3. DBT scheme allows time-bound transfers hence avoids delays in transferring money, which is one of the biggest problems that beneficiaries are facing.
  4. This scheme eliminates intermediaries and rents for ‘fair price shops’ because subsidies and benefits of welfare schemes are transferred directly. This will help Indian economy in the long run as the structural expenditure will be reduced.
  5. Transparency in the distribution of benefits.
  6. As everyone can purchase goods at market price, there will be healthy competition between the sellers in the market. The problem of middlemen diverting subsidized grains to markets will be eliminated.
  7. It encourages people to have bank account.
  8. The problem of food grains storage and spoilage in the process can be eliminated.
  9. Circulation of money will be increased, which can lead to a significant increase in the GDP.
  10. It will help India to transform itself into cashless economy.

Disadvantages od DBT

  1. Even now there are many rural & tribal areas, which don’t have banking facility and road connectivity.
  2. Currently, only 3% Indians pay income tax. Therefore, determining the income of the rest of the citizens is still a challenge hence making it difficult to identify the deserving beneficiaries.
  3. Most of the banks appoints Business Correspondents to enroll beneficiaries in rural areas. They may open more than one account for each beneficiary for incentive. And there are many complaints that they are not giving passbooks to the beneficiaries making them unaware of the scheme. Illiterate beneficiaries are more vulnerable in this case.
  4. Direct cash may not be used for intended purpose and can be used in unhealthy ways. For example, the cash instead of food subsidy may be spent on drinking and smoking as most of beneficiaries’ families’ heads are men.
  5. Micro ATMs, which were set up to deliver cash benefits at door step are not present in many areas hence many beneficiaries have to travel long to withdraw money.
  6. Most of the beneficiaries’ families’ heads are men. This will be a disadvantage to women as there is no guarantee that they will get their share of the cash.

Why is DBT recommended for Building and Other Construction (BOC) Workers now?

  • It had come to the notice of the Ministry of Labour and Employment that some State Welfare Boards were issuing tenders or incurring expenditure on distribution of household items such as lanterns, blankets, umbrellas, tool-kits and similar articles instead of on tangible welfare measures such as life insurance, health insurance and old-age pensions etc., for the workers.
  • Since the procurement process adds layers to the entire process, with apprehension of leakages both at the procurement stage and at the distribution end – it was mandated that the State Welfare Boards (SWBs) not to distribute articles and household items to the BOC workers.
  • Transfer of money in the form of cash has been completely stopped by the instant order and any monetary assistance has to be necessarily given through DBT.
  • The recent order mentions that no benefit can be provided in-kind except in extra-ordinary circumstances such as natural calamities, epidemics, fire, accidents caused due to occupational hazard or similar other crisis and only with the prior approval of the State Government.

-Source: Indian Express

November 2023