Day 30 – Q 2. Is the mechanism of direct benefit transfer (DBT) scalable and replicable across different sectors? Critically examine. 

  • IASbaba
  • July 14, 2020
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Agriculture, GS 3, TLP-UPSC Mains Answer Writing
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2. Is the mechanism of direct benefit transfer (DBT) scalable and replicable across different sectors? Critically examine. 

क्या प्रत्यक्ष लाभ हस्तांतरण (डीबीटी) का तंत्र विभिन्न क्षेत्रों में स्केलेबल और पुन: प्रयोज्य है? समालोचनात्मक जांच करें।

Demand of the question:

It expects students to analyse mechanism of direct benefit transfer (DBT). It also expects students to analyse both aspects of scalability and replicability of DBT across different sectors.


Direct Benefit Transfer or DBT  is a part of the Indian government’s anti-poverty programme where government is trying to alter the method of transferring subsidies. In DBT, benefit or subsidy will be directly transferred to citizens living below the poverty line. DBT is applied in programmes & schemes like Student Scholarship, LPG subsidy etc.


Direct benefit transfer reaches to beneficiary through following mechanism:

  • First, Identification of beneficiaries and digitisation of beneficiary database takes place.
  • Then,Opening of bank accounts if beneficiary doesn’t have any bank account.
  • Once bank account is opened up, Aadhaar enrolment of beneficiary should take place.
  • The,Seeding of Aadhaar in beneficiary database and bank accounts.
  • Initiating Last mile connectivity/service delivery as per the protocol through directly depositing the money in to beneficiaries account. 

Reliability of mechanism of Direct Benefit transfer across different sectors:

  • PAHAL is the first major programme in India that provided subsidies through DBT. With nearly 150 million registered beneficiaries, it is probably the world’s largest DBT programme ever.
  • The goal of the DBT is subsidy reform and not doing away with subsidies. It targets beneficiaries effectively so that they flow only to the intended beneficiaries.
  • The  problems of Public distribution system such as product adulteration, leakages, ghost ration cards and harassment of beneficiaries by the rationing bureaucracy can be avoided through DBT. Hence, its reliability can be measured on this ground that it ensure targeted subsidy delivery.
  • With the help of the Aadhaar number, the identification of the beneficiary can be done better.
  • It Reduces the need for large physical movement of goods. It Also reduces citizens hardships.

Scalability of Direct Benefit transfer across different sectors :

  • Cash transfer: Under this scheme, cash is directly transferred from the government to the individual beneficiaries. For instance, Some of the examples are the National Social Assistance Programme (NSAP) and MGNREGA.
  • In-kind benefits from the government to beneficiaries: Components of the schemes or the schemes itself are a part of this category. The government provides beneficiaries with in-kind benefits via an intermediate agency. 
  • The government usually bears the cost to buy the goods that can be used for public distribution as well as for providing them to the beneficiaries that they have targeted. The beneficiaries then get these services or goods for a very low price or for free. e.g. Manufacturers of fertilizers receive 100% of subsidy after fertiliser is delivered to the farmer.
  • Other forms of transfers: Incentives, allowances, etc., that are provided to Non-Government Organisations (NGOs) and community workers come under this category. They are provided such allowances because of the service they provide to other beneficiaries and to the community. e.g. NABARD agri-loan mechanisms.  
  • Hence, the flexibility of offering DBT via different methods ensures the scalability of the DBT, as DBT can be modified or moulded as per need of different sectors. 

Despite its wide scale application and scalability DBT mechanism still poses some challenges:

  • Aadhar registrations presently covered around 91% of population. Since DBT is linked with Aadhar for  schemes, there is need to improve Aadhar linkage to 100% so that not a single person can be left out.
  • Low level of digital literacy in the rural areas  poses one of the major challenge in implementing this mechanism.
  • India has reached 81% financial inclusion and this will potentially exclude people from the rural background. Lack of banking facilities will exclude people to access facilities. Here, governments PM- Jan dhan Yojna will play a pivotal role.
  • Bank Correspondents face numerous challenges to reach people, who do not have bank account. Banking correspondents also struggle with connectivity and technical problems. Banking services at rural level needs to be improved to reach benefits to all.

It can be said that DBT has some structural and organisational challenges. Which needs be addressed in a due period of time. Overall it seems that reliability and scalability of DBT mechanism can play a major role to ensure welfare of people in different sectors of economy. 


Hence, In a heterogeneous country like India different sectors have different objectives and challenges. Here, DBT mechanism due to its scalability and reliability can play a major role by fulfilling & addressing sector specific objectives and challenges to ensure good governance for all.

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