India has been plagued by the ever growing subsidy burden and the three major subsidies are - Food, Fuel and Fertilizers. The subsidy regime in India is necessary due to the mass poverty whereby it becomes obligatory for the State to look after the needs of the poorest of the poor. While the aim of the subsidy regime as practiced in India has been laudable, it is in the execution of the subsidy regime that questions have been raised. Two major problems being faced by the subsidy regime are - (1) Pilferage / Leakage of subsidy and (2) Mis-targeting of subsidy. The Direct Benefit Transfer (DBT) aims to solve both the issues of leakage and mis-targeting by making use of the JAM (Jan Dhan, Aadhaar and Mobile) trinity. Please find below consolidated information on DBT for better understanding and clarity.
Direct Benefit Transfer (DBT)
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Direct Benefit Transfer (DBT)
1. Two
major issues w.r.t. subsidies in India
i. Targeting
ii. Leakages
2. Both
issues can be addressed by government’s ongoing DBT push
3. Leakages
occur when subsidies do not reach the recipients due to corruption, pilferage
or other causes
4. Mis-targeting
benefits higher income groups that do not deserve the subsidies
5. DBT
simply involves transferring the subsidy amount directly to the beneficiaries’
bank account instead of having to fiddle around with differential pricing for
the under-privileged
6. Efficient
targeting using Aadhaar-linked data ensures that the intended beneficiary
receives the money in his/her account
7. DBT
Scheme for LPG subsidies named PAHAL (Pratyaksh Hastantrit Labh) utilizes
linking of consumers Aadhaar number to their bank account where they can
receive the subsidy amount for 12 cylinders in a year
8. Govt.
has recently decided to limit the LPG subsidy to people earning less than Rs.10
lakhs in a year
9. DBT addresses the leakage issue while the income
cap addresses the mistargeting problem
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