A Study on Direct Benefit Transfer

Financial Inclusion Plans

Nithin Venugopal Research Scholar

St.Thomas College, Kozhencherry.

Delivery of financial services at an affordable cost for the under privileged and low income groups to improve and achieve social inclusion.The biggest step towards financial inclusion in recent periods is Direct Benefit Transfer Scheme (DBT).

Financial Inclusion Plans

What?Transfer of benefits directly to beneficiary’s account.

When?

The scheme is operational from January 1st 2013.

Why?To generate budget savings & reduce leakages, corruption, eliminate middlemen, speed up transfer of benefits to the deserved.

How?With the help of a biometric Aadhaar linked bank account.

Direct Benefit Transfer Scheme

SubsidiesPensionsScholarshipsMGNREGS Wages, etc.

Direct Benefit Transfer Scheme

Amount Transferred to

Poor

Re.1. Rs.3.65

Report of Planning Commission on PDSAmount Expended for such transfer

PDS SYSTEM

BEFORE DBT

SUBSIDISED GRAINS

PDS DIVERTED

BENEFICIARY

PDS SYSTEM

AFTER DBT

SUBSIDISED GRAINS

PDS @ Wholesale price

BENEFICIARY (Pays Wholesale Price)

(Account is credited with subsidy amount)

Challenges ahead for DBTOnly 400m aadhaars has been issued which leaves 800m to be issued before April 2014.

According to Dy.Gov of RBI only 40% of Indians have bank account.About 188000 villages had banking connectivity as on Jun’2012 whereas India has 700000 villages.For those who don’t have access to bank branches will have to depend on ‘Banking Correspondents’ or ‘BCs’Currently BCs cover only 70000 villages which require a further 10 fold expansion.

Challenges ahead for DBTThe major hurdle involved in DBT is identifying the actual beneficiary.

Last BPL census was done in 2002. The new list is list would be ready only by 2013 end or in early quarter of 2014.So the major challenge before Govt. is that whether it should use the 2002 list or should it wait for the new one.

States with largest number of Aadhaar enrolments.• (

Source: Planning Commission Report)

Andhra Pradesh

• 65,942,390

Maharashtra

• 62,697,642

Facts & Figures

THANK YOU