India’s Direct Benefit Transfer (DBT) system has emerged as one of the exemplary reforms in the country’s welfare delivery mechanism. A recent report by the BlueKraft Digital Foundation highlights that DBT has helped India save Rs 3.48 lakh crore by stopping leakages and ensuring that benefits directly reach the people who need them. Before DBT was introduced, a large portion of welfare funds was lost due to corruption, middlemen, and fake beneficiaries. This system has not only reduced such wastage but has also transformed the way government support reaches the common citizen.
The DBT model operates through the JAM trinity, Jan Dhan bank accounts, Aadhaar unique identification numbers, and mobile phones. These three pillars have enabled the government to deliver subsidies, pensions, wages, and various benefits straight into people’s bank accounts. This has brought transparency and accountability to the system. The report studied the period between 2009 and 2024 and clearly showed that as the country shifted from paper-based welfare systems to digital transfers, public money started reaching real beneficiaries, faster and without middlemen.
One of the major achievements of DBT has been the way it improved efficiency without increasing overall spending. For instance, in the years before DBT (2009–2013), the government used to spend about 16 per cent of its total budget on subsidies, amounting to Rs 2.1 lakh crore every year. After DBT was implemented, this dropped to 9 per cent of total government expenditure by 2023–24, even though the number of beneficiaries increased dramatically from 11 crore to 176 crore. This 16-fold increase in coverage, while reducing the subsidy burden, proves how efficient and targeted the new system has become.
A key part of the report is the Welfare Efficiency Index (WEI), which was developed to measure the performance of DBT over the years. This index takes into account three main factors, the savings achieved by cutting leakages, the reduction in the share of subsidies in the total budget, and the rise in the number of beneficiaries. In 2014, the WEI was just 0.32. By 2023, it had risen to 0.91, showing a big improvement in how welfare funds are being used. These improvements were not just because of spending less, but because the money was being spent in the right way and reaching the right people.
The report also gives a detailed sector-wise analysis that shows how DBT made a big difference in schemes that earlier had high levels of corruption and leakages. In the Public Distribution System (PDS), for example, Aadhaar-based authentication helped remove fake ration cards, resulting in savings of Rs 1.85 lakh crore, over half of the total DBT savings. In the MGNREGS scheme, which pays wages to rural workers, 98 per cent of the payments were made on time after DBT was introduced, saving Rs 42,534 crore. Under the PM-KISAN scheme, which provides income support to farmers, 2.1 crore ineligible beneficiaries were removed, saving Rs 22,106 crore. Even fertiliser subsidies, which were once misused, were better managed through DBT, saving Rs 18,699 crore.
Interestingly, the report also looked at the relationship between different data points and found some strong correlations. There was a strong positive correlation between the increase in the number of beneficiaries and the amount saved through DBT, meaning, as more genuine people were included in the system, more money was saved. On the other hand, there was a negative correlation between the amount spent on subsidies and overall welfare efficiency. This means that as spending on subsidies came down, the system became more efficient. So, instead of blindly increasing spending, DBT made it possible to help more people with less money by improving how the system worked.
Even during the COVID-19 pandemic, when the government had to quickly roll out emergency support, the DBT system proved its strength. Though there was a temporary increase in subsidy spending during 2020–21, the system quickly bounced back and continued to deliver benefits effectively. This shows that DBT is not only efficient in normal times but also resilient during crises.
India’s DBT system has brought about a quiet revolution in public service delivery. By plugging leakages, cutting down waste, and ensuring direct transfers to real beneficiaries, the system has saved the country an enormous amount of money. At the same time, it has increased the reach of welfare programs without putting extra pressure on the budget. The rise in the Welfare Efficiency Index proves that DBT is not just a cost-saving measure but a tool for inclusive development.
As other countries look for ways to improve their own social welfare programs, India’s experience with DBT offers an inspiring and practical model. It shows that with the right use of technology and political will, it is possible to create systems that are both financially wise and socially just.
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