OPINION: How DBT can improve subsidy payout and remove fake transactions


OPINION: How DBT can improve subsidy payout and remove fake transactions

Over the past year, at least 12 citizens in Jharkhand have reportedly succumbed to hunger caused by a denial of direct benefit transfer (DBT)-linked public distribution system (PDS) rations, social security pensions and Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) payments.

The Reserve Bank of India (RBI) has recently cautioned states from shifting to a DBT mechanism for food subsidies. The drive for efficiency in subsidy disbursement is a benign concept. But poorly implemented, it can have fatal consequences.

Subsidy, With a Grain of Salt

India’s subsidy disbursement system has historically been flawed, leakages in PDS being a key example. Almost 54% of PDS grains were diverted in 2005. Five years later, the figure was 41%. The lowest diversions were in Tamil Nadu (7%) and highest in Bihar (85%) in 2005. Read More

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