India's DBT System Saves Rs 3.48 Lakh Crore, Boosts Welfare Efficiency: BlueKraft Report

New Delhi, Apr 22 (KNN) A new quantitative assessment by the BlueKraft Digital Foundation has revealed that India's Direct Benefit Transfer (DBT) system has generated cumulative savings of Rs 3.48 lakh crore by eliminating leakages in welfare delivery.

The report indicates that subsidy allocations have decreased from 16 percent to 9 percent of total government expenditure since DBT implementation, representing a significant improvement in public spending efficiency.

The assessment, which analyses data from 2009 to 2024, examines DBT's impact on budgetary efficiency, subsidy rationalisation, and social outcomes.

The transition from paper-based disbursals to direct digital transfers has ensured public funds reach intended beneficiaries.

A cornerstone of the DBT system is the JAM trinity—Jan Dhan bank accounts, Aadhaar unique IDs, and mobile phones—which has enabled targeted and transparent transfers at scale.

To comprehensively measure impact, the report introduces a Welfare Efficiency Index that combines fiscal outcomes with social indicators.

This index has increased nearly threefold from 0.32 in 2014 to 0.91 in 2023, demonstrating substantial improvements in both effectiveness and inclusion as governments worldwide reconsider approaches to social protection.

The data reveals distinct trends before and after DBT implementation. During the pre-DBT era (2009-2013), subsidies averaged 16 per cent of total expenditure at approximately Rs 2.1 lakh crore annually with considerable system leakages.

In the post-DBT era (2014-2024), subsidy expenditure decreased to 9 per cent of total expenditure by 2023-24, while beneficiary coverage expanded 16-fold from 11 crore to 176 crore.

A temporary subsidy spike occurred during fiscal year 2020-21 due to pandemic-related emergency measures, though efficiency subsequently rebounded.

Sector-specific analysis demonstrates DBT's particular benefit to high-leakage programs. Food subsidies under the Public Distribution System saved Rs 1.85 lakh crore, representing 53 per cent of total DBT savings, largely through Aadhaar-linked ration card authentication.

The MGNREGS program achieved 98 per cent timely wage transfers, saving Rs 42,534 crore through improved accountability.

The PM-KISAN scheme saved Rs 22,106 crore by removing 2.1 crore ineligible beneficiaries, while fertiliser subsidies saved Rs 18,699.8 crore by reducing sales of 158 lakh MT of fertiliser through targeted disbursement.

Correlation analysis further validates DBT effectiveness, showing a strong positive correlation (0.71) between beneficiary coverage and DBT savings, indicating that expanded coverage coincided with increased savings.

A significant negative correlation (-0.74) between subsidy expenditure percentage and welfare efficiency highlights the reduction in waste and leakages facilitated by DBT.

The Welfare Efficiency Index comprises three weighted components: DBT savings, subsidy reduction, and beneficiary growth.

The substantial increase in this index quantifies systemic improvements and emphasises that efficiency gains stem from multiple factors rather than merely budget cuts.

The BlueKraft Digital Foundation report concludes that DBT has proven transformative for India's welfare delivery by enhancing public spending efficiency while expanding social benefits reach.

This data-driven assessment demonstrates that fiscal prudence and inclusivity can be complementary goals, offering valuable insights for global policymakers seeking to refine their social protection models while balancing fiscal constraints and social equity concerns.

(KNN Bureau)