• The Direct Benefit Transfer (DBT) has helped the government achieve cumulative savings of Rs 3.48 lakh crore by plugging leakages in welfare delivery, according to a report by BlueKraft Digital Foundation.

• The report, which was shared by the Finance Ministry, evaluated data from 2009 to 2024 to examine the impact of DBT on budgetary efficiency, subsidy rationalisation, and social outcomes.

What is Direct Benefit Transfer? 

• Schemes introduced in the past have often struggled to achieve their goals due to ill targeting, leakages and ineffective service delivery.

• Several levels of sanctions within the federal structure also led to further delays, thereby creating space for various inefficiencies and duplication of effort. 

• Thus, subsidies and benefits which are needed for different sections of the society require a well-targeted system of delivery which ensures timely transfer of benefits to the citizens of the country.

• Direct Benefit Transfer (DBT) was launched on January 1, 2013 with the aim of reforming the government delivery system by re-engineering the process in welfare schemes for simpler and faster flow of information/funds and to ensure accurate targeting of the beneficiaries, de-duplication and reduction of fraud.

• DBT is government’s major reform initiative using Information & Communication Technology (ICT) by transferring benefits into the bank/postal accounts, preferably Aadhaar seeded, of accurately targeted beneficiaries, as well as in-kind transfers from government to individual beneficiaries.

• DBT Mission was created with the Planning Commission acting as the nodal point for the implementation of the DBT programmes. 

• The Mission was transferred to the Department of Expenditure in July 2013.

• To give more impetus, DBT Mission and matters related thereto have been placed in Cabinet Secretariat from September 2015.

• One of the key features of DBT is the use of the JAM trinity, which stands for Jan Dhan bank accounts, Aadhaar unique ID numbers and mobile phones. 

• Through JAM, under Direct Benefit Transfer, the government has successfully transferred subsidies and social benefits directly into the bank accounts of the underprivileged.

• As on January 15, a total of 54.58 crore Jan Dhan accounts have been opened under Pradhan Mantri Jan Dhan Yojana (PMJDY), of which 30.37 crore (55.7 per cent) belong to women.

Key points of the new report:

• The report finds that subsidy allocations have been halved from 16 per cent to 9 per cent of total government expenditure since the implementation of DBT, reflecting a major improvement in the efficiency of public spending.

• In the pre-DBT era (2009-2013), subsidies averaged 16 per cent of the total expenditure, amounting to Rs 2.1 lakh crore annually, with considerable leakages in the system. 

• In the post-DBT era (2014-2024), subsidy expenditure decreased to 9 per cent of total expenditure in 2023-24, while beneficiary coverage surged 16-fold from 11 crore to 176 crore.

• As per the report, Rs 1.85 lakh crore was saved under the food subsidies (PDS), which accounted for 53 per cent of total DBT savings. This was largely due to Aadhaar-linked ration card authentication.

• In MGNREGS, 98 per cent of wages were transferred timely, leading to savings of Rs 42,534 crore through DBT-driven accountability.

• Under PM-KISAN, use of DBT has helped save Rs 22,106 crore by deleting 2.1 crore ineligible beneficiaries from the scheme.

• Under fertilizer subsidies, sale of 158 lakh tonnes of fertiliser were reduced, saving Rs 18,699.8 crore through targeted disbursement.

• The system’s role in biometric authentication and direct transfers has been crucial in improving efficiency and curbing misuse.

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