Direct Cash Transfer- A Real Game Changer

Abstract

The Indian government, since independence has been subsidizing many industries and products, from petrol to food. Lossmaking state-owned enterprises are supported by the government. Farmers are given electricity for free. Overall, a 2005 article by International Herald Tribune stated that subsidies amounted to 14% of GDP. Government has announced ambitious plan of Direct Benefit Transfers (DBT) to the poor. On January 1, 2013 government will shift the delivery of welfare services to a new architecture: straight into an individual's bank account, verified by a unique identification (UID) number called Aadhaar. Initially this scheme will be launched in 20 districts as a pilot before its nationwide launch. Under the scheme, those living below the poverty line will receive between 30,000 rupees and 40,000 rupees per year in lieu of 26 welfare programs, including scholarships and pensions. This will not include subsidies for food, kerosene and fertilizers which forms major part of government subsidy bill. This scheme will help to deliver money in the hands of people who deserve it. It will reduce subsidy bill and in efficiency in the delivery system. DCT will transfer money in the hands of beneficiary without corruption, commission and leakage. In the long run it will help to reduce fiscal deficit. here are many questions on success of this scheme as rightful implementation is the key. As of now, all efforts of the government are directed towards implementation and make DCT a real game changer.