Direct Benefit Transfer – A blessing during the time of Pandemic

Direct Benefit Transfer or DBT has travelled a long path since its early initiation by Government of India on 1 January 2013 to change the mechanism of transferring cash subsidies and benefits.The program was aimed at transfer of subsidies and

cash benefits directly to the people through their Aadhaar seeded bank accounts with a hope that crediting subsidies into the bank accounts would substantially reduce leakages, and associated delays, owing to the flow of fund in a multi hierarchy of administrative offices till it reaches the end beneficiary. Central Plan Scheme Monitoring System (CPSMS), the earlier avatar of the Public Financial Management System (PFMS), of the Office of Controller General of Accounts, was chosen to act as the common platform for routing of the Direct Benefit Transfer. CPSMS was 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. Since the first payment was made to a mother in the Puducherry for the Janani Suraksha Yojana in January 2013, DBT emerged as a high priority and focus area of the Government, in reforming Government delivery system by re-engineering the existing process in welfare schemes for simpler and faster flow of information/funds, ensuring accurate targeting of the beneficiaries, de-duplication and reduction of fraud. In the past seven years, DBT emerged as the accepted way of

delivering development schemes with the delivery of over 450 schemes to more than 900 million people through this mode. Since 2014, the government has disbursed a whopping Rs 8.22 lakh crore — close to 60 per cent of welfare and subsidies budget of the Union government — directly to the bank accounts of beneficiaries.

Components of DBT
Primary components in the implementation of DBT schemes include Beneficiary Account Validation System, a robust payment and reconciliation platform integrated with RBI, NPCI, Public & Private Sector Banks, Regional Rural Banks and Cooperative Banks (core banking solutions of banks, settlement systems of RBI, Aadhaar Payment Bridge of NPCI) etc.

Beneficiary Account Validation
These systems constitute workflow based systems for social sector Central Sector, Centrally Sponsored and State linked schemes and include functionalities such as application for scheme by beneficiary with details of bank account/Aadhaar, examination by scheme owners for eligibility of the beneficiary under scheme guidelines, initiate verification of bank account/Aadhaar, initiate payment through Fund Transfer Order, other MIS related functions etc. MNREGA, PM-AWAS, PM-KISAN, DBT-PAHAL etc. are some examples of such systems. While in many of the schemes, the payments are linked to Aadhaar, cases are also processed with bank account number, in case Aadhaar is not available.

Payment and Reconciliation
On the selection of valid beneficiaries, the Scheme IT systems initiate the payment by sending payment instructions to PFMS which in turn is routed to banks after necessary validation of beneficiaries. PFMS evolved as a robust payment and reconciliation platform integrated with 500+ banks for verification of bank account of beneficiary and for verification if Aadhaar seeding of bank accounts of beneficiary, with NPCI. This pre-validation of beneficiary account/Aadhaar linked bank, drastically brought down the failure of the payments as well as the delays in amount being available in the hands of beneficiary.
Core Banking Solutions: Banks being the last mile delivery channels, play a very critical role in the DBT process flow. As all account based payments are routed through the core banking channels, processing efficiency at this stage coupled with flow of reverse MIS imparted the desired momentum to the DBT programme.

Aadhaar Payment Bridge (APB)
Aadhaar Payment Bridge (APB) System, one of the unique payment systems implemented by NPCI, uses Aadhaar number as a central key for electronically channelizing the Government benefits and subsidies in the Aadhaar Enabled Bank Accounts (AEBA) of the intended beneficiaries. NPCI creates an Aadhaar mapper in order to facilitate the transfer of funds. This mapper is the backbone of Aadhaar Payments Bridge (APB) where information pertaining to the Banks seeded with the Aadhaar number is maintained in the mapper based on which NPCI routes payments to the destination Bank and credit accorded to the DBT beneficiary.

DBT during COVID-19

With the outbreak of the COVID-19 pandemic and the imposition of lockdown and social distancing norms, DBT emerged as a boon in providing succour and relief to millions of citizens whose livelihood was impacted. As the crisis loomed large, a lockdown was imposed by the Government for 21 days. The Public Financial Management System (PFMS) team took up the challenge during this adversity of facilitating smooth functioning of the financial machinery of the Govt. of

India. PFMS recorded the highest number of transactions in a single day on 30th March, 2020 of 2.19 crore transactions largely driven by DBT payments. Cash amounts were transferred using the digital payments technology vehicle, Public Financial Management System (PFMS) under Central Schemes (CS) and Centrally Sponsored Schemes (CSS). Between March 24 and April 17, the DBT payments under all the central sector/centrally sponsored schemes through PFMS amounted to Rs 27,442.08 crore in the accounts of 11.42 crore beneficiaries through schemes like PM-KISAN, Mahatma Gandhi

National Employment Guarantee Scheme (MGNREGS), National Social Assistance Program (NSAP), Prime Minster’s Matru Vandana Yojana (PMMVY), National Rural Livelihood Mission (NRLM), National Health Mission (NHM), scholarship schemes of various ministries through the National Scholarship Portal (NSP). In addition, states like UP, Bihar, Madhya Pradesh, Tripura, Maharashtra, Jammu & Kashmir, Andhra Pradesh also leveraged on the DBT platform of PFMS.

Through 180 welfare schemes, the state governments using PFMS have disbursed to 4.59 crore beneficiaries, an amount of Rs 9,217.22 crore between March 24 and April 17.With the crisis deepening, and as the number of beneficiary spiked, India’s DBT structure was further tested. Till 9th October, 2020, of the financial year 2020-21, a total of 47 Crore beneficiaries received DBT relief to the tune of ₹ 1,41,714 crores.Balazs Horvath, chief economist, UNDP, Asia-Pacific, said: “If a large part of an entire generation loses its livelihood, with no social safety net to catch it, the social

costs will be unbearably high. Economic instability will follow.” Whether DBT or cash transfer would be able to offset the economic damage caused by the COVID-19 pandemic is a subject of debate. DBT played a major role in sustaining life especially of the under-privileged segments of the society impacted by the COVID-19 crisis, helping millions in providing immediate relief in tiding over the turbulent period.