The Government of India during the UPA tenure introduced the Direct Benefits Transfer Scheme. In the words of the Planning Commission (now defunct)- "The purpose of Direct Benefits
Transfer is to ensure that benefits go to individuals' bank accounts electronically,
minimising tiers involved in fund flow thereby reducing delay in payment, ensuring
accurate targeting of the beneficiary and curbing pilferage and duplication." ( See - http://www.dbtmis.planningcommission.nic.in/dbtentry/homepage.aspx)
One such subsidy for which DBT has been implemented is LPGsubsidy. Details can be found at : http://petroleum.nic.in/dbt/#
While the objective of these subsidies is to reduce inequity and allow access to certain essential goods to the poor the earlier mechanism allowed too much of pilferage, administrative costs and , diversion. With DBT the government is expected to save huge amounts and spend taxpayer money better. One estimate of the savings for the previous fiscal puts it as Rs.10,000 crore approx. See :
http://www.livemint.com/Industry/PGCreyRo9L9rCt3Vx3xyBO/DBTL-helps-govt-save-Rs10000-crore-as-illegal-LPG-consumpti.html
But some questions remain. Will the average beneficiary spend the transferred amount on LPG? How will the mechanism of buying at market price and receiving an income transfer affect individual consumption behaviour? Is it necessary for paternalistic intervention in consumption behaviour?
One such subsidy for which DBT has been implemented is LPGsubsidy. Details can be found at : http://petroleum.nic.in/dbt/#
While the objective of these subsidies is to reduce inequity and allow access to certain essential goods to the poor the earlier mechanism allowed too much of pilferage, administrative costs and , diversion. With DBT the government is expected to save huge amounts and spend taxpayer money better. One estimate of the savings for the previous fiscal puts it as Rs.10,000 crore approx. See :
http://www.livemint.com/Industry/PGCreyRo9L9rCt3Vx3xyBO/DBTL-helps-govt-save-Rs10000-crore-as-illegal-LPG-consumpti.html
But some questions remain. Will the average beneficiary spend the transferred amount on LPG? How will the mechanism of buying at market price and receiving an income transfer affect individual consumption behaviour? Is it necessary for paternalistic intervention in consumption behaviour?
