List of Contents
Relevance: This article explains DBT Mission’s achievement, challenges and solutions.
It is not much discussed, but the success of the Direct Benefits Transfer (DBT) Mission is indisputable.
Over the last 18 months, while, there have been very few silver linings in government actions. One of them has been a demonstration of the effect of the JAM (Jan Dhan Yojana-Aadhaar-Mobile phone) trinity in keeping millions of Indians away from starvation. The success of the Direct Benefits Transfer (DBT) Mission is indisputable.
How DBT Mission improved the government’s welfare transfers?
- Former prime minister Rajiv Gandhi admitted that the ordinary citizen received only 15 paise of every rupee that the government tried transferring to him/her. This situation is changed drastically after the intervention of DBT.
- Increased government welfare transfers: Between the benefits transferred in cash and kind, government welfare transfers amounted to ₹5.52 trillion in 2020-21, compared with a mere ₹7,367 crores in 2013-14.
Challenges faced by the DBT Mission:
- The DBT process has many layers of authorities involved, but the point of contact with the beneficiary for cash withdrawal is the most critical. However, surveys reveal that a quarter of these agents are operating with losses. But agent viability and service quality are central to financial inclusion.
- The issue of agent viability and service quality is not a direct responsibility of the DBT Mission. It falls under the department of financial services in the ministry of finance.
- A long-standing issue has been the inadequate compensation paid by the government to the banking channel for DBTs.
- Different payment mechanisms are currently in use between the Union and state governments. Whereas the Union government uses the NPCI channel, states use NEFT and RTGS. This makes it difficult for banks to receive DBT commissions.
Suggestions to improve the DBT Mission:
- The government has to differentiate commission charges for agents specific to the location. They should be higher for rural areas where economic activity is low.
- The government can enrol and permit more women as banking business correspondents. This will also help in women empowerment in rural areas.
- The governments (central and state) has to keep the eligibility criteria and enrolment process simple for benefits schemes. For instance, the enrolment of beneficiaries through the UMANG app based on eligibility parameters can also be done through banking correspondents and not limited only to common services centres, as is the case currently.
- Many of the operational challenges that DBT faces can be mitigated by putting an effective customer grievance redressal mechanism in place.
India has begun spectacularly with the DBT Mission. But the DBT Mission is not a project with a well-defined beginning and endpoint. It’s a continuous one. So, the government has to institute the required processes and mechanisms, identify glitches and rectify them in time.