February 23, 2018
Governments since antiquity have tried to offer some level of welfare to the poor and these programs have expanded in modern times to truly large proportions. For instance, the supplemental nutrition assistance program (SNAP) in America costs approximately $71 billion a year (In 2016-17, GoI DBT payout was approx. 7.54 billion). Reducing the cost of administering these programs and increasing their effectiveness (by better targeting, eliminating fraud and corruption, reducing the number of intermediaries) has been a key challenge for all governments.
The use of technology has improved benefit administration considerably. We have gone from expensive paper tokens (US food stamps printed at the mint to minimize fraud) to electronic transfers straight to the beneficiaries’ bank account (India’s Direct Benefit Transfer scheme).
India’s implementation of Direct Benefit Transfer (DBT) has been a big step in eliminating a lot of the waste of earlier forms of benefit distribution. It not only reduces administration cost but by leaning on Aadhaar, the DBT system reduces both types of fraud – of ‘duplicates’ (a name getting benefits more than once) and ...