DBT system delivers big: Rs 3.48 lakh crore saved, subsidy share falls to 9% – DBT system delivers big: Rs 3.48 lakh crore saved, subsidy share falls to 9% BusinessToday

The Direct Profit Switch system, which was launched in 2013, has grow to be one of the bold reforms within the nation’s public welfare panorama. By shifting from in-type and middleman-primarily based subsidy supply to a digital-first, Aadhaar-authenticated mannequin, DBT has considerably improved the accuracy, attain, and accountability of welfare disbursements.

As per a quantitative evaluation achieved by Shakil Bhat, Senior Fellow, Viksit Bharat, the DBT system has had a profound and measurable affect on each subsidy rationalisation and social outcomes, reshaping the structure of welfare supply since its rollout in 2013. 

Bhat, in his evaluation, discovered that earlier than DBT, welfare schemes typically suffered from misidentification of beneficiaries, ghost entries, and corruption by intermediaries. DBT immediately credit the entitlements—be it subsidies, pensions, or scholarships — into beneficiaries’ financial institution accounts, minimizing human interface and thereby decreasing corruption. Between 2009 and 2024, this mechanism is estimated to have saved ₹3.48 lakh crore by curbing such leakages.

The Aadhaar-primarily based authentication system performs a vital function on this course of, making certain that solely real beneficiaries obtain funds. Actual-time monitoring, linked financial institution accounts, and digitized scheme monitoring have launched accountability throughout the subsidy pipeline.

Right here’s an in depth evaluation of its significance:

Influence on subsidy rationalisation

Leakage discount and Fiscal financial savings

DBT has enabled direct switch of advantages to Aadhaar-verified beneficiaries, eliminating middlemen and ghost entries. This resulted in cumulative financial savings of Rs 3.48 lakh crore, with meals subsidies alone contributing Rs 1.85 lakh crore (53% of whole financial savings) by Aadhaar-linked Public Distribution System (PDS) reforms.

Some of the placing outcomes of DBT is its affect on authorities expenditure. In 2009, subsidies accounted for almost 16% of whole authorities spending. By 2024, this determine had dropped to 9%. This discount is just not due to cuts in welfare spending however due to higher focusing on and the elimination of redundant or fraudulent claims.

Schemes like LPG subsidy (PAHAL), MGNREGA wage funds, and PM-KISAN have been introduced beneath DBT, permitting the federal government to reallocate funds extra successfully and scale back fiscal burdens with out compromising on welfare aims.

Budgetary Effectivity

Regardless of a virtually fourfold rise in welfare budgets (from Rs 2.1 lakh crore in 2009–10 to Rs 8.5 lakh crore in 2023–24), the share of subsidies in whole expenditure halved—from 16% pre-DBT to 9% post-DBT, marking a big fiscal consolidation with out shrinking social commitments.

Focused Disbursements

Applications like PM-KISAN noticed Rs 22,106 crore in financial savings by eliminating 2.1 crore ineligible beneficiaries. Equally, MGNREGS achieved 98% well timed wage transfers, indicating higher fund movement and administrative effectivity.

Welfare Effectivity Index (WEI)

A proprietary composite metric developed within the report—which mixes financial savings, subsidy reductions, and beneficiary development—rose from 0.32 in 2013 to 0.91 in 2023, offering empirical validation for DBT’s effectiveness in rationalising subsidies whereas increasing affect.

Influence on Social Outcomes

Protection Enlargement

Beneficiary outreach grew 16-fold, from 11 crore in 2013 to 176 crore in 2024, with no proportional rise in spending. This displays DBT’s function in widening entry whereas sustaining fiscal self-discipline.

Fairness and Inclusion

By immediately reaching focused people, DBT minimized corruption and arbitrary exclusion, selling better social fairness. Wage transfers, scholarships, pensions, and different entitlements at the moment are delivered in a extra dignified and clear method.

Behavioral and Structural Shifts

DBT inspired checking account penetration (by way of Jan Dhan) and digital engagement, reshaping the best way residents work together with the state. This has had optimistic spillovers in monetary inclusion, digital literacy, and civic participation.