New Delhi [India], April 21 : India's Direct Benefit Transfer (DBT) system has helped the country achieve cumulative savings of Rs 3.48 lakh crore by plugging leakages in welfare delivery, a new quantitative assessment by the BlueKraft Digital Foundation found, the Ministry of Finance said on Monday.
The report also finds that subsidy allocations have been reduced from 16 per cent to 9 per cent of total government expenditure since the implementation of DBT.
It asserted that the DBT system has led to a major improvement in the efficiency of public spending.
The assessment evaluates data from 2009 to 2024 to examine the impact of DBT on budgetary efficiency, subsidy rationalisation, and social outcomes.
It demonstrates how the transition from paper-based disbursements to direct digital transfers has ensured that public funds reach the intended recipients.
One of the key features of DBT is the use of the JAM trinity, which stands for Jan Dhan bank accounts, Aadhaar unique ID numbers and mobile phones.
To capture the full extent of its impact, the report introduces a Welfare Efficiency Index. This index combines fiscal outcomes such as savings and reduced subsidies with social indicators like the number of beneficiaries reached, offering a clear picture of how well the system is working. The index has risen nearly threefold from 0.32 in 2014 to 0.91 in 2023, reflecting a sharp increase in both effectiveness and inclusion.
"The data on subsidy allocations reveals a significant shift post-DBT implementation, highlighting improvements in fiscal efficiency despite a surge in beneficiary coverage," the finance ministry said in a statement.
Pre-DBT Era (2009-2013): Subsidies averaged 16 per cent of total expenditure, amounting to Rs 2.1 lakh crore annually, with considerable leakages in the system.
Post-DBT Era (2014-2024): Subsidy expenditure decreased to 9 per cent of total expenditure in 2023-24, while beneficiary coverage surged 16-fold from 11 crore to 176 crore.
COVID-19 Outlier: A temporary spike in subsidies occurred during the 2020-21 fiscal year due to emergency fiscal measures. However, efficiency rebounded following the pandemic, further validating the system's long-term effectiveness.
"The reduction in subsidy burden, despite a significant increase in coverage, underscores DBT's role in optimising fiscal allocations. By eliminating ghost beneficiaries and middlemen, the system redirected funds to genuine recipients without proportional increases in the budget," the finance ministry statement read.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor