The political economy of India, since its independence, can be understood as a struggle to break free from constraints inherited from centuries of foreign rule while aspiring to rise as a nation of global importance. Immediately afterward, the government of our nation emphasized centralized planning, coupled with the public provisioning of essential goods and services. However, even after several decades of this approach, the situation at the ground level did not improve as expected . The situation was marred with cases where citizens were unable to access the welfare transfers meant for them. The section of the population that was able to receive the benefits did not receive them in a timely manner. Furthermore, the entire process was a financial nightmare due to fund leakages at various levels of government. This problem was highlighted by Mr. Rajiv Gandhi during his tenure as Prime Minister in his famous remark: For every rupee spent by the government on welfare, only 15 paise is received by the intended beneficiaries .
The root cause of this issue lay in India’s limited state capacity and the lack of accountability among government officials responsible for the smooth functioning of these welfare programs . However, despite numerous efforts over the years to address these issues, no drastic improvement was observed. A breakthrough was achieved in 2014 during the initial months of the new government under the leadership of Prime Minister Modi. The solution involved a novel adoption of digital technologies which was called the Direct Benefit Transfer (DBT) Mission.
Rethinking Public Service Delivery in India
The inception of DBT can be traced back to 2013 as a pilot project, which spanned only 43 districts of the country and covered only 24 Central Sector (CS) and Centrally Sponsored (CSS) schemes. However, there were several challenges that were identified during the initial phase and the biggest among them was the low level of financial inclusion, especially in rural areas. This limited the reach of DBT in our country. In recognition of the problem at hand, the newly elected Prime Minister Modi launched the world’s biggest financial inclusion program in the form of Pradhan Mantri Jan Dhan Yojna (PMJDY).
PMJDY was a game changer right from its launch with more than 1.8 crore accounts being opened for people who were previously out of the formal banking system. This achievement was recognised by the Guinness Book of World Records as the highest number of bank accounts opened in a week. The progress showed no sign of stopping with more than 17 crore people benefited in the first year and according to the latest data over 54 crore Jan Dhan accounts have been opened. The biggest benefit of this scheme has been reaped by people residing in the rural and semi-urban areas with it accounting for more than 2/3 of the total bank accounts opened.
The success of PMJDY paved the way for the creation of the world’s biggest targeted payments framework. Commonly referred to as the JAM (Jan Dhan, Aadhaar, and Mobile) Trinity, the platform leveraged the near universal adoption of Aadhar cards to uniquely identify beneficiaries, while Jan Dhan accounts enabled with mobile banking services ensured that government transfers reached the people directly, without any delay and with no financial leakages. In the last ten years, DBT enabled by JAM has transformed the landscape of public service delivery in India by ensuring transparency, accountability, and efficiency.
Transformational Impact
The impact of DBT has been realised since its inception. According to the official data , the total number of schemes using the DBT framework has increased by more than 11 times, from 28 schemes in 2013-14 to 323 schemes in 2024-25. The total funds transferred has also increased by nearly 1000 times, from around 7400 crores in 2013-14 to nearly 7 lakh crores in 2023-24. This has been estimated to have cumulatively saved the government exchequer around 3.5 lakh crores . A comprehensive analysis of the benefits of DBT can be understood in the following manner –
Reduction of Ghost Beneficiaries
In the previous regime, due to a complex chain of intermediaries, the financial resources released by the government would leak to people who were not the intended beneficiaries. However, DBT mission was able to solve this problem by eliminating fake or duplicate beneficiaries using data from Aadhar card as a unique identifier. Further, with the rise in financial inclusion levels, DBT is able to transfer benefits directly to the intended recipient by eliminating the intermediaries. Prominent success stories include schemes like PAHAL, MGNREGS, and PDS that have cumulatively eliminated more than 9.2 crore fake or duplicate beneficiaries.
Ensuring timely transfers of benefits
Another problem with public service delivery before DBT was the untimely transfer of benefits. This was prominent in various scholarships schemes aimed at promoting education and pension schemes operated under the National Social Assistance Program (NSAP). By leveraging the benefits of digital technologies, DBT has been able to ensure that funds are transferred automatically without any delay. This has also brought dignity to the beneficiaries as they don’t have to make rounds to government offices just to ensure a timely disbursal of their entitlements.
Rethinking welfare
The increased transparency and accountability brought in by DBT has also allowed the government to design programmes aimed at widening the understanding of welfare measures. Few examples include schemes like Swachh Bharat Mission (SBM) which have been able to improve sanitation while also producing multiple secondary benefits like reduction in infant and early-age mortality rate and reduction in crimes against women . Additionally, Pradhan Mantri Jan Arogya Yojna (PM-JAY) has completely revamped public health insurance by increasing the coverage and removing exclusion clauses which were present in its predecessor. Another example has been the Pradhan Mantri Samman Nidhi (PM-KISAN) which has been designed to bring dignity to farmers by providing an annual cash transfer of 6000 rupees which can be utilised as per the discretion of the beneficiary reducing the need for money borrowing from informal sources.
Aside from the impact mentioned above, DBT has also proven revolutionary during the COVID-19 crisis by ensuring continuity in government transfers. On top of this, DBT also became the perfect mechanism for delivering the stimulus package (Pradhan Mantri – Garib Kalyan Yojna) announced by the government in the wake of the pandemic. This feat would have been impossible in the era of public service delivery before DBT.
Leveraging DBT for a More Inclusive Future
DBT mission is one of the biggest success stories in transforming public service delivery in our country. International organisations like the World Bank , the International Monetary Fund , and the Asian Development Bank have lauded the policy instrument in its effort toward increasing the reach of government welfare measures while also curbing corruption and financial leakages. Going forward, the gains in efficiency brought in by DBT possess the ability to allow policy makers to bring more exiting schemes to utilise the DBT framework, while also providing them freedom to innovate with radical new policies aimed at addressing a more holistic concept of well-being. Working on this front will be critical for ensuring that India stays on its path of becoming a developed nation by 2047.
(Ishan Singh is a public policy professional)
