Introduction
For the underprivileged section of the society, the government of India has launched welfare schemes from time to time demanding huge cost to the exchequer in the form of sponsorships.
Indian government has been providing subsidy on both merit and non-merit goods, which include subsidy on education, health, fertiliser, power, oil, food grains, kerosene and LPG. The major challenge in front of the government is managing subsidies on petroleum, food grains, kerosene and LPG under the Public Distribution System (PDS).
According to the Economic Survey 2017–2018, the subsidy bill is placed at 3.0 per cent of GDP. There has been an increment in the subsidy bill from time to time.
The revised non-plan expenditure for year 2015–2016 was `26,000 crore and expected budget for 2017–2018 is `24,700 crore.
The expected direct financial cost of petroleum and food subsidies is about `3,78,000 crore or about 4.24 per cent of GDP.
Prima facie, price subsidies did not affect so much the living standards of the poor, though they have helped underprivileged families, withstand price rises and price volatility.
To overcome with the challenges of managing subsidy, the Direct Benefit Transfer Scheme (DBTS) was introduced in 2013.
What is Direct Benefit Transfer Scheme?
The DBTS offers direct transfer of currency into the bank accounts of eligible persons known and covered under several government welfare programmes.
The scheme has been compared with the Brazilian Bolsa Familia which is the social welfare programme of the Brazilian government. The scheme has brought together the delivery of a various range of existing social programmes in India, for example social pensions, student scholarships and employment guarantee scheme payments.
Initial Phase of DBTS
Dilli Annashree Yojana is the centre of DBTS and launched by the Delhi Government in December 2012, which used DBT tool for delivering privileges. Under the scheme, an amount of `600 per month was transferred to the account of the seniormost female member of the eligible family, and this was the first cash transfer scheme for food security in the country.
Afterwards, DBTS was launched on 1 January 2013 in 20 districts of India by the then Prime Minister of India, Manmohan Singh. The inauguration ceremony of the scheme was organised at Gollaprolu in East Godavari district on 6 January 2013. By the end of March 2013, it was planned to be cover 26 social welfare programmes in 43 districts of 16 states.
To avoid duplication, the scheme was launched by linking it with biometric-based Unique ID programme, Aadhaar. Duplication means one person getting benefits multiple times, and ‘ghosts’ i.e. non-existent people getting benefits.
In addition, use of micro ATMs and banking correspondents (BCs) was planned to influence the core banking infrastructure of commercial banks for transfer of benefits.
DBT for LPG Consumers (DBTL) Scheme
On 1 June 2013, the Union Minister of Petroleum and Natural Gas, M Veerappa Moily, launched DBTS for LPG consumers (DBTL) at Tumkur near Bangalore in 20 high Aadhaar coverage districts. After that, in these districts, the subsidy on LPG cylinders was provided directly to consumers in their Aadhaar-linked bank accounts.
On 15 November 2014, Prime Minister Narendra Modi-led NDA government introduced the modified Version of DBTL Scheme in 54 districts in 11 states including all in Kerala. Under this scheme, LPG consumers not availing the benefit will get cash subsidy transferred into their accounts to buy Liquefied Petroleum Gas (LPG) cylinders at market price. It was extended in the remaining parts of the country on 1 January 2015 under the scheme PAHAL.
On 1 January 2016, after observing the financial success of DBT in LPG, the Union Government planned to launch the similar DBT for kerosene subsidy. The aim of the scheme was to cut down the diversion and black marketing of the fuel.
DBTS for Kerosene
According to government approximations, the subsidy outgo for kerosene for the financial year 2014–2015 was approximately `24,799 crore, and the distribution of subsidised PDS kerosene at 86.85 lakh kilolitres was more than the consumption at 71.3 lakh kilolitres.
The Union Government announced in January 2016 to launched the DBTS in kerosene which will cover 26 districts across eight states from 1 April 2016 including Chhattisgarh, Haryana, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Punjab and Rajasthan.
The government has given cash incentive of 75 per cent of subsidy savings during the first two years, 50 per cent in the third year and 25 per cent in the fourth year to incentivise states to implement DBT kerosene.
Conclusion
From the viewpoint of welfare function of any government, these subsidies is necessary, however, demands well-organised management so that the subsidy reaches the right person and in time without becoming a load on the financial situation. After numerous surveys and studies, it has been revealed that subsidised goods and welfare benefits have not been reaching to intended beneficiaries