Direct Benefit Transfer Scheme

The Union government on January 1 launched the Direct Benefit Transfer Scheme (DBTS) for kerosene subsidy. The difference between the market price and PDS price of kerosene will be directly credited into the bank accounts of the users. Several state governments have come forward to implement DBT in kerosene in selected districts.

The scheme is set to be rolled out in Raipur, Durg and Bilaspur in Chhattisgarh, Panipat and Panchkula in Haryana, Shimla, Solan and Una in Himachal Pradesh, Chhatra, Giridih, East Singbhum, Hazaribagh, Jamtara and Khunti in Jharkhand.  In order to incentivise states to implement DBT in kerosene, they will be given cash incentive of 75% of subsidy savings during the first two years, 50% in the third year and 25% in the fourth year.

In case some states voluntarily agree to undertake cuts in kerosene allocation beyond the savings due to DBT, a similar incentive will be given to them. The calculation will be based on net savings in kerosene consumption at state level.

Subsidy transfer takes place through through a biometric-based identification system (Aadhaar). 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. CPSMS can be used for the preparation of beneficiary list, digitally signing the same and processing of payments in the bank accounts of the beneficiary using the Aadhaar Payment Bridge of NPCI.

The purpose of DBTS is to ensure that benefits go to individuals’ bank accounts electronically, minimising tiers involved in fund flow thereby reducing delay in payment, ensuring accurate targeting of the beneficiary and curbing pilferage and duplication.  DBTS was launched by the Government of India on 1 January 2013. It initially covered scholarships and social security pensions.

Later, The Direct Benefit Transfer Scheme for LPG subsidy, now renamed PaHaL or Pratyaksha Hastaantarit Laabh, was launched. It covers more than 65 per cent of 15.3 crore LPG consumers in the country. Prime Minister Narendra Modi was informed in June last year that a total of 14 to 15 per cent saving is being achieved in cooking gas subsidy alone, as a result of elimination of leakages, and duplication.

“Savings (by way of DBT) in different scenarios could be from 0.2-1.2 per cent of GDP, depending on the schemes targeted and whether all the states participate,” a UBS report pointed out.