Taking Direct Benefits Transfer to The Next Level
Direct Benefit Transfer (DBT), also known as cash transfer, is currently popular. The infographic below gives the reasons driving this trend, which are also explained in my previously published article in the Economic Times, 'Delivering subsidies through DCT’ (June 2011).
Reasons behind current popularity of direct benefits transfer (DBT) - Copyright www.sameersharma.blog
As DBT has come to stay, how can it be advanced to the next level? Some steps to design an upgraded form of DBT (DBT 2.0) are outlined below -
Step 1: Direct (unconditional) cash transfer would be the default option, and would replace existing programmes where the poor need repeated and continuing assistance, like pensions for the aged. If there is risk of inflation or non-availability of items in the market, then materials like foodgrains would be supplied to the needy.
Step 2: If specific public policy goals have to be met, then conditions would be imposed on cash transfer. For example, if the goal is to improve learning outcomes, then school fee reimbursement would depend on schools meeting student reading, writing and arithmetic assessment standards. If large sums must be distributed to meet needs, such as to make self-help groups repay loans on time, then interest subsidies would be given, subject to on-time loan repayment by the groups.
Step 3: If the aim is to achieve a specific goal or develop enterprises or market in a particular commodity or service, vouchers would be given. For example, if the policy purpose is to encourage rental housing in cities, vouchers would be preferred, instead of giving cash. Generation of detailed monitoring data is an advantage of vouchers.
Step 4: If specific community works are required and enough cash for work would be the preferred choice, like NREGS.
Most importantly, DBT 2.0 will become a real game changer if structural changes accompany the strategic elements traced above.
Anthropologist Akhil Gupta, in his Book, Red Tape[1] carried out ethnographic research among officials charged with coordinating development programs in rural Uttar Pradesh. He found that corruption, the significance of writing and written records and expansion of bureaucracies, were the greatest barriers to programme implementation at the local level.
The design of DBT addresses corruption as money goes directly to bank accounts, and the large-scale use of digital technology has reduced over-reliance on written records at the local level. The unfinished task is rightsizing local level bureaucracies. One way of doing this is to identify redundancy introduced by DBT and doing away with these levels.
Essentially, DBT consists of direct cash transfer to beneficiary accounts as well as covering all beneficiaries within an identified category (saturation approach). The Blocks were doing this task up till now. So, restructuring can start with downsizing the blocks and distributing their work other functionaries (e.g. village).
In short, DBT 2.0 would consist of cash transfers founded on categorical pay-outs topped by conditional transfers to meet the varying needs of diverse groups of people and the unique characteristics of local areas.
The full potential of DBT 2.0 will be unleashed only if the rightsizing of local level official structures goes hand-in-hand with its widespread adoption.
[1] Gupta, Akhil: 2012. Red Tape: Bureaucracy, Structural Violence, and Poverty in India. Duke University Press.
Previously published articles on direct benefits transfer: ‘Delivering subsidies through DCT’, Economic Times, June 2011; ‘Direct Cash Transfer scheme: India must learn from Latin America and Kenya’, Economic Times, December 2012.
