Higher commissions for banks and agents in rural areas will bring substantial returns to the govt immediately
Whatever criticism one may have of the present government, the lack of big ideas and push to implement the direct benefits transfer (DBT) cannot figure in them.
Fixing the leaky subsidy regime is a massive challenge, politically and operationally, and this is being taken on.
Although multiple solutions have been proposed over the past decade, getting everyone a bank account is the first step for DBT. Here, the big idea of Pradhan Mantri Jan-Dhan Yojana (PMJDY) came to the forefront. The next big idea came from the Economic Survey—the JAM (Jan Dhan+Aadhaar+Mobile) trinity to effectively target subsidies.
Niti Aayog has taken the idea further, to use the JAM trinity to match all existing DBT and socioeconomic databases. While cleaning out databases and matching them will be challenging, the policy intent is clear—widening the coverage of DBT, reducing leakages and moving towards precisely targeted subsidies.
The government has gone beyond just talk; there has been considerable action with many pieces falling into place to streamline the DBT process.
The Aadhaar imbroglio that had hit liquified petroleum gas subsidy transfers last year was resolved, allowing the option of bank accounts, and both Aadhaar and PMJDY coverage continue to expand at a fast clip.
Last December, 27 DBT schemes were extended from the initial 121 districts to the entire country, and 7 scholarship schemes were added. From April, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has been added to the DBT platform in 300 districts—this is a big step forward. The notifications on the MGNREGS payouts process show a willingness to address existing operational bottlenecks. For instance, payment of commissions to banks is now due on credit into the beneficiary account, rather than on withdrawal—this takes care of a major concern for the banks that are investing in extending services to all DBT beneficiaries in the last mile.