Reforming the government delivery system through the Direct Benefit Transfer Scheme is a progressive step, but it has its limitations too. Comment.

Direct Benefit Transfer (2013), riding on the JAM trinity of Jan Dhan accounts, Aadhaar and mobiles, now routes over 300 central schemes directly into beneficiary bank accounts.

A progressive reform

• Leakage control: de-duplication and removal of ghost beneficiaries in PAHAL (LPG), MGNREGA and PDS have yielded cumulative savings officially estimated at around Rs 3.5 lakh crore.
• Speed and dignity: PM-KISAN instalments and pandemic-era cash support reached crores of households within days, bypassing intermediaries and rent-seeking.
• Empowerment: transfers into women's Jan Dhan accounts strengthen intra-household bargaining and financial inclusion.

Its limitations

• Exclusion errors: biometric authentication failures, dormant or mis-seeded accounts and poor connectivity push out genuine beneficiaries — the elderly, manual workers with worn fingerprints, and remote tribal areas suffer most.
• Last-mile banking gaps: sparse rural branch and banking-correspondent networks convert entitlements into travel and time costs.
• Value erosion: cash benefits are rarely indexed to inflation, unlike in-kind food entitlements under NFSA.
• Not a substitute: DBT cannot repair supply-side deficits in health, education or nutrition services, and weak grievance redress leaves failed payments unresolved.

DBT should mature through offline and exception-handling protocols, inflation indexation, dense banking-correspondent coverage and social audits — efficiency gains must never be purchased with exclusion of the poorest.