Subject: Economy

India's transition from price subsidies to Direct Benefit Transfer (DBT) marks a paradigm shift in welfare delivery, with the implementation of JAM Trinity (Jan Dhan-Aadhaar-Mobile) revolutionizing the subsidy landscape.

Positive Changes through DBT Implementation

1. Enhanced Efficiency and Targeting:

• Elimination of ghost beneficiaries leading to savings of ₹3.35 lakh crore between FY18-24 through better identification of genuine recipients.
• Reduction in subsidy allocation from 16% to 9% of total government expenditure after DBT implementation, as per BlueKraft Digital Foundation.
• Achievement of 98% timely wage transfers in MGNREGS through DBT, resulting in savings of ₹42,534 crore.

2. Financial Inclusion and Empowerment:

• Direct transfer to beneficiary accounts promotes financial literacy and banking habits.
• Empowerment of beneficiaries through choice in spending, particularly benefiting women account holders.
• Integration with PM Jan Dhan Yojana ensuring last-mile delivery of benefits.

3. Market Efficiency:

• Reduction in market distortions caused by price subsidies.
• Better price discovery mechanisms in sectors like fertilizers and food grains.
• Promotion of competitive markets through reduced government intervention.

Challenges and Way Forward

1. Implementation Challenges:

• Digital literacy barriers in rural areas.
• Infrastructure gaps in banking services.
• Internet connectivity issues affecting timely transfers.

2. Required Interventions:

• Strengthening digital infrastructure in rural areas.
• Regular updating of beneficiary databases.
• Enhanced grievance redressal mechanisms.
• Capacity building of local administration.

The transformation from price subsidies to DBT represents a significant step towards transparent governance and efficient resource allocation. Success stories like UP's agriculture subsidies and Assam's welfare schemes demonstrate DBT's potential in revolutionizing India's welfare delivery system, aligning with the vision of Digital India and financial inclusion.