Subject: Social Justice

The implementation of Direct Benefit Transfer (DBT) marks a paradigm shift in India's welfare delivery mechanism, representing a crucial step towards Digital India and financial inclusion. The system's remarkable expansion from 11 crore to 176 crore beneficiaries by 2023-24 demonstrates its transformative potential in reaching the last mile.

Benefits of Electronic Cash Transfer System

Minimizing Corruption:

• Elimination of Intermediaries: Direct transfer to beneficiaries' bank accounts reduces scope for middlemen and rent-seeking behavior.
• Digital Trail: Every transaction is recorded electronically, ensuring accountability and traceability.
• JAM Trinity: Integration of Jan Dhan, Aadhaar, and Mobile creates a robust verification system to prevent fraudulent claims.

Eliminating Wastage:

• Targeted Delivery: Precise identification of beneficiaries through Aadhaar-linked accounts reduces ghost beneficiaries.
• Cost Reduction: The system has generated cumulative savings of ₹3.48 lakh crore by reducing leakages in welfare delivery.
• Resource Optimization: Reduction in subsidy allocations from 16% to 9% of total government expenditure indicates improved efficiency.

Facilitating Reforms:

• Financial Inclusion: Mandatory bank accounts promote banking habits among marginalized sections.
• Digital Literacy: Encourages adoption of digital payment systems and financial technology.
• Policy Implementation: Enables quick rollout of welfare schemes during emergencies like COVID-19 pandemic.

Challenges and Way Forward

Implementation Challenges:

• Digital Divide: Limited internet connectivity and technological literacy in rural areas.
• Banking Infrastructure: Need for expansion of banking correspondents and ATM networks.
• Authentication Issues: Biometric failures and connectivity problems in remote areas.

Suggested Solutions:

• Infrastructure Development: Strengthening digital and banking infrastructure in rural areas.
• Capacity Building: Training programs for beneficiaries and local administrators.
• Grievance Redressal: Establishing robust mechanisms to address technical issues.

The electronic cash transfer system through DBT has emerged as a cornerstone of governance reforms in India, exemplified by successful implementations in states like Uttar Pradesh for agriculture subsidies and Madhya Pradesh for electricity subsidies, marking a significant step towards achieving SDG 16 (Peace, Justice, and Strong Institutions).