Direct Benefit Transfer (DBT) – Frequently Asked Questions

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Image Credit: Page on www.currentaffairsonline.in

Direct Benefit Transfer or DBT is an attempt to change the mechanism of transferring subsidies launched by Government of India on 1 January 2013. This program aims to transfer subsidies directly to the people through their bank accounts. It is hoped that crediting subsidies into bank accounts will reduce leakages, delays, etc.
The primary aim of this Direct Benefit Transfer program is to bring transparency and terminate pilferage from distribution of funds sponsored by Central Government of India. In DBT, benefit or subsidy will be directly transferred to citizens living below poverty line. Central Plan Scheme Monitoring System (CPSMS), being implemented by the Office of Controller General of Accounts, will act as the common platform for routing DBT.
Source: Direct Benefit Transfer

What is Direct Benefits Transfer and what does it cover:
Page on www.currentaffairsonline.in

  1. Government will transfer cash benefits like scholarships, pensions, NREGA wages, etc. directly to the Bank or Post Office Accounts of identified beneficiaries under the Direct Benefits Transfer (DBT) programme. The shift to this would done in a phased, time-bound manner after ensuring that the necessary systems are in place for Direct Benefits Transfer.
  2. Direct Benefits Transfer will not be a substitute for delivery of public services which would continue to take place as per the normal delivery channels.
  3. Direct Benefits Transfer will not replace food with cash under the Public Distribution System. The Government is committed to legislating the National Food Security Act.

Frequently Asked Questions (FAQs)

Source: Ministry of Finance, Government of India
UIDAI – Official Website
UIDAI = Unique Identification Authority of India

Frequently Asked Questions

Question: What is the Background of Direct Cash Transfers?
Answer: With the rapid rollout of Aadhaar, covering more than 20 crore people and rapidly growing to cover 60 crore, with the National Population Register doing the other half, it was felt possible to move to a system of transferring cash benefits directly to the poor.

In order to rollout the implementation of a seamless electronic Aadhaar based cash transfer system for transfer of cash benefits to beneficiaries, the Prime Minister approved the setting up of a National Committee on Direct Cash Transfers chaired by himself and an Executive Committee on Direct Cash Transfers. The goal was to rapidly rollout cash transfers across the country for as many government schemes and benefits as possible within the next year.

Question: What are Cash Transfers?
Answer: Cash Transfers are programs that transfer cash directly, generally to poor households, with or without conditions. The purpose of a cash transfer could be:

  • To provide a monetary benefit for a specific purpose or use – such as for education through a scholarship, for healthcare through a medical assistance program, etc.
  • Direct income support – such as old age income support through a pension, unemployment assistance through an unemployment benefit, etc. This is predicated on the assumption that there is a need to redistribute income as a public policy objective. Often, the purpose is to enhance private consumption levels and achieve a minimum consumption floor.
  • To provide a direct subsidy for specific products – such as for food, fuel, agricultural inputs, electricity, books, etc.

They are generally of two types –

  1. unconditional and
  2. conditional

Cash Transfer programs that do not impose any conditions for making the transfers are called Unconditional Cash Transfers.

Conditional Cash Transfers transfer cash on the condition that those households make pre-specified investments in the human capital of their children. In general, this has involved attaching “conditions” to transfers.

Question: What is the major objective of Direct Benefits Transfer Programme?
Answer: This Programme envisages a switch from the present electronic transfer of benefits to bank accounts of the beneficiary to transfer of benefits directly to Aadhaar seeded bank accounts of the beneficiaries. The other objectives are:

  • Accurate Targeting
  • De-duplication
  • Reduction of Fraud
  • Process Re-engineering of Schemes for simpler flow of information and funds.
  • Greater Accountability

Question: Which are the committees formed for execution of Direct Benefits Transfer?
Answer: the following committees have been formed for execution of Direct Benefit Transfer.
• The Government has constituted the National Committee on Direct Cash Transfers (Page on planningcommission.nic.in), chaired by the Prime Minister, to coordinate action on the implementation of the DBT Program. This Committee is to be assisted by the Executive Committee on Direct Cash Transfer (Page on planningcommission.nic.in), chaired by the Principal Secretary and convened by Secretary, Planning Commission.

  • To ensure orderly and timely implementation, Mission Mode Committees (Page on planningcommission.nic.in), namely, Financial Inclusion Committee, Technology Committee and Implementation Committee on Electronic Transfer of Benefits were also constituted.
  • Direct Benefit Transfer Division was created in the Planning Commission to provide secretarial service to PMO and act as the Nodal Agency in the implementation of DBT.

Question: What are the Guidelines issued for execution of DBT Roll out?
Answer: The DBT Division issued consolidated instructions to the concerned Ministries with approval of the Executive Committee. Office Memorandum#1 (Page on planningcommission.nic.in) on Guidelines on Standardized Formats for Collection of Basic Data to facilitate Direct Benefits Transfer (DBT) in Pilot Districts, was issued on 26.12.12. OM#2 (Page on planningcommission.nic.in) on Procedure for seeding Aadhar Numbers and OM#3 (Page on planningcommission.nic.in) on Procedure for sending Payment Advice to Banks were issued on 8.01.13.

Question: How did Direct Benefits Transfer roll-out commence?
Answer: A decision was taken in the meeting of the National Committee on Direct Cash Transfers held by the Prime Ministers that Direct Benefit Transfers will be rolled out from 1st January, 2013 in 43 districts (Page on planningcommission.nic.in), 26 selected Central Sector and Centrally Sponsored Schemes (Page on planningcommission.nic.in)  in a phase wise manner beginning with 20 districts on 1.1.2013, 11 districts from 1.2.2013 and the remaining 12 districts from 1.3.2013.

Question: What were the criteria for selection of these schemes?
Answer: Schemes were selected on the basis of higher incidence of beneficiaries with bank accounts and where Flow of Funds was found to be relatively simpler. Accordingly, most schemes are related to scholarships, benefits to women and child labour.

Question: What were the criteria for selection of districts?
Answer: 43 districts were identified on the basis of higher Aadhaar enrolment figures and presence of banks.

Question: Which major schemes have not yet been planned for Direct Benefits Transfer roll-out?
Answer: Schemes like MGNREGA ( Mahatma Gandhi National Rural Employment Gurantee Act), IAY (Indira Awaas Yojana), pension related schemes have not yet being planned for Direct Benefits Transfer roll-out.

Question: What is the reason for not doing so?
Answer: Major reasons for not including these schemes for Direct Benefits Transfer roll-out are large no. of rural beneficiaries, poor coverage of banks in rural area, most beneficiaries having accounts in post offices and decision of Post-Offices to join Core-Banking System by Mid-June 2013 only.

However, these schemes may be considered for Direct Benefits Transfer roll-out after post-offices join the core-banking system.

Question: How many Banks are on Board for Direct Benefits Transfer roll-out?
Answer: There are 26 PSU Banks, 12 RRBs and Few Private Banks and Cooperative Banks are on board for roll out of Direct Benefits Transfer. These banks are equipped with Core Banking System.

Question: What are the arrangements made for filling the gap between banking infrastructure and customers?
Answer: The Business Correspondents (BCs) are proposed to be introduced to reach the unbanked population, as the credit and operational risks in the branchless banking model does not enable banks to reach the unbanked population. This eliminates the need for a physical bank branch or ATM’s in remote areas.

Question: Were there any pilot projects taken into account for implementation of DBT?
Answer: UIDAI had been conducting pilot projects and other field studies to explore the efficacy and efficiency of Aadhaar authentication in the context of Financial Inclusion, Public Distribution System, LPG delivery and Pensions. Apart from that pilot projects in respect of kerosene has been under taken in Kotkasim Tehsil of Alwar District, Rajasthan.

Question: What were the outcomes of these pilot projects?
Answer: These pilot projects have shown tremendous benefits by providing effective service delivery to the targeted beneficiaries.

  •  The Financial Inclusion pilot project in Jharkhand enabled direct cash transfer by the Jharkhand Government to the beneficiaries’ Aadhaar-linked bank accounts under various programs like MNREGS, Old Age Pensions and Student Scholarships, to avoid leakages.
  • The pilot project initiated by Consumer Affairs, Food and Civil Supplies Department of Andhra Pradesh utilized Aadhaar Authentication platform to deliver services to more than 85,000 households with around 3 lakh target beneficiaries through more than 145 fair price shops (FPS) in the Districts of East Godavari and Hyderabad.
  • The LPG pilot was initiated in the district of Mysore by the three Oil Marketing Companies – IOCL, BPCL and HPCL in January 2012, under the aegis of Ministry of Petroleum and Natural Gas. The objective of the pilot was to use Aadhaar biometric authentication to minimize diversion of subsidized LPG cylinders.

The target consumer base for the pilot was around 85,000 beneficiaries, across 3 LPG distributors (gas agencies) in Mysore – one each for IOCL, BPCL and HPCL.
Subsidized LPG cylinders were delivered by delivery boys after successful biometric authentication of any family member present in the household. Around 50,000 successful deliveries have been made so far using biometric authentication.
The next phase of pilot would scale up operations in the entire district. It would also undertake transfer of subsidy amount directly into the bank accounts of beneficiaries while the LPG cylinder is delivered at market price. This would eliminate the incentive to divert subsidized LPG cylinders.

Join PAHAL (DBTL)

ENSURE YOUR LPG SUBSIDY IN BANK AND PREVENT ITS MISUSE

Launched in 54 districts on 15.11.2014 and in Rest of India on 01.01.2015.

dbtl
Image source

About the PAHAL (DBTL) Scheme

  • Consumers will need a bank account to join the scheme and receive LPG subsidy
  • Consumers will also get one time permanent advance in their bank account prior to buying the first market priced LPG cylinder
  • Consumers will receive subsidy in their bank account as per their entitlement of subsidized cylinders
  • Till consumers join the scheme they will get cylinders at:
    • Subsidized price for 3 months w.e.f 15.11.2014 till 14.02.2015
    • Market price for next 3 months, but the subsidy due will be given to them if they join the scheme within these 3 months i,e till 14.05.2015
  • W.e.f 15.05.2015 all LPG consumers will get cylinders at market price and only those who join the scheme will receive one time permanent advance & subsidy from the date of joining
  • To join the scheme and receive subsidy, consumers should use, Option 1 if they have Adhaar and Option 2 if they don’t have Aadhaar:

Source: http://petroleum.nic.in/dbt/

Question: What were the steps taken for execution of the LPG pilot project?
Answer: For this pilot, the consumer data base was seeded with the Aadhaar number and each consumer was asked to provide UID number of his family members as well as one neighbour, who were authorized to receive the LPG cylinder on his behalf. Further, the three participating companies got a common application developed that provided the UID authentication and delivery management overlay and data exchange with their native cylinder booking and delivery module.

A PoS device was used for authentication of the receiver as well as recording of delivery of LPG cylinder.

PoS (Point of Sale) Device

best-point-of-sale-system
Image source
pos-terminal-risk-management-rules-you-need-to-know
Image Source: POS Terminal Risk Management Rules You Need to Know

Question: When Direct Benefits Transfer roll out for LPG is to be launched?
Answer: With regard to direct transfer of subsidies for LPG, Ministry of Petroleum and Natural Gas has stated that the Government intends to link cash subsidy to Aadhaar card of LPG customer in three phases. In the first phase, it is proposed that 51 districts will be covered and only in districts where the penetration of Aadhaar exceeds 80 %.
It will begin in the district of Mysore, where the pilot programme had been run successfully. The Aadhaar enrolment of the consumer has reached more than 80% and more than 50% digitized database of consumer has been seeded with Aadhaar number.

Question: What steps have been taken by the government for providing Direct Cash to the Subsidy for food? Does government mean to dismantle the Targeted Public Distribution System (TPDS)?

Answer: As far as direct transfer of subsidies for food is concerned, Ministry of Consumer Affairs, Food and Public Distribution has stated that there is no proposal under consideration at present in the Department for disbursement of food subsidy in cash instead of foodgrains to beneficiaries under Targeted Public Distribution System (TPDS).
However, the Department proposes to introduce a pilot scheme in selected Union Territories (UTs) for direct transfer of food subsidy under TPDS, wherein foodgrains will be issued by Food Corporation of India at economic cost.  The proposal does not involve dismantling the TPDS. Ministry has pointed out that the proposed pilot scheme will test the feasibility of the launch of the scheme in other States/UTs.

Question: How the cash subsidy of food will be disbursed to the beneficiaries?
Answer: As per the information furnished by the Ministry of Consumer Affairs, the cash subsidy equal to the difference in the economic cost and the prevailing issue price will be credited to the bank account of the beneficiary in advance to enable the beneficiary to purchase the foodgrains at this cost.  The scheme is expected to check leakages/diversion of foodgrains under TPDS. The details of the schemes will be worked out in consultation with UTs etc.

Question: Has the government run any pilot for Pension Schemes?
Answer: Pension’s pilot in Aurangabad District in Maharashtra was initiated with the objective of directly transferring monetary benefit into the bank account of pensioners using the Aadhaar Payments Bridge. Aadhaar number was linked to the list of beneficiaries to eliminate fake beneficiaries. Aadhaar Enabled Payment System was used by Banking Correspondents to disburse funds through micro-ATM.

Question: What is Aadhaar Payment Bridge System?

aadhar-card-online-registrationImage Source: Aadhaar card

Answer: Aadhaar Payment Bridge is the new payment service offered by the National Payments Corporation of India (NPCI) using the Aadhaar number issued by the Unique Identification Authority of India (UIDAI), known as Aadhaar Payment Bridge System and is referred as “APBS”. APBS will be used for credit transactions for Government/ Government agency disbursements
APBS has the following objectives.
• To sub-serve the goal of Government of India (GOI) and Reserve Bank of India (RBI) in furthering Financial Inclusion by way of processing government disbursement using Aadhaar number.
• To promote electronification of retail payments.

Question: What is the Implementation Status of Direct Benefits Transfer roll-out?
Answer: A DBT MIS (Direct Benefit Transfer Management Information System) MIS ON DIRECT BENEFIT TRANSFER (DBT)
system has been created for compiling information on DBT roll out status in the districts.  The 8 concerned Ministries/Departments are required to collect, verify and upload this data onto the DBT MIS System.  Maintenance of this information on the DBT MIS will facilitate availability of data on real time basis. This will prove essential in ensuring successful implementation of DBT.  Summary record of status of implementation has been compiled and is available at –
Page on planningcommission.gov.in

The information regarding amount of funds transferred to the beneficiaries is available at (Page on planningcommission.nic.in)

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