DBT saves Rs 3.48 lakh crore, records 16-fold surge in beneficiaries: Report

The Direct Benefit Transfer (DBT) system has helped the country achieve cumulative savings of Rs 3.48 lakh crore by plugging leakages in welfare delivery, a latest quantitative assessment report by BlueKraft Digital Foundation has revealed.

The report, released by the Ministry of Finance on Monday, showed that subsidy allocations have been almost halved from 16 to 9 per cent of the total government expenditure since the implementation of DBT in 2013, reflecting a major improvement in the efficiency of public spending.

The assessment evaluated data from 2009 to 2024 to examine the impact of DBT on budgetary efficiency, subsidy rationalisation, and social outcomes.

The shift from paper-based disbursals to direct digital transfers has ensured that public funds reach their intended beneficiaries. One of the key features of DBT is the use of the JAM trinity, which stands for Jan Dhan bank accounts, Aadhaar unique ID numbers and mobile phones. This framework has enabled targeted and transparent transfers on a massive scale.

To capture the full extent of its impact, the report introduced a welfare efficiency index, which combined fiscal outcomes such as savings and reduced subsidies with social indicators like the number of beneficiaries reached, offering a clear picture of how well the system is working. The index has risen nearly threefold from 0.32 in 2014 to 0.91 in 2023, reflecting a sharp increase in both effectiveness and inclusion.

“At a time when governments across the world are rethinking how to strengthen social protection, the DBT model presents valuable lessons in aligning financial prudence with equitable governance,” the report said.

KEY FINDINGS

Budgetary Allocation Trends

The data on subsidy allocations reveals a significant shift post-DBT implementation, highlighting improvements in fiscal efficiency despite a surge in beneficiary coverage.

Pre-DBT era (2009–2013): Subsidies averaged 16 per cent of total expenditure, amounting to Rs 2.1 lakh crore annually, with considerable leakages in the system.

Post-DBT era (2014–2024): Subsidy expenditure decreased to 9 per cent of total expenditure in 2023-24, while beneficiary coverage surged 16-fold from 11 crore to 176 crore.

Sectoral Analysis

A detailed breakdown of sector-specific impacts shows how DBT has particularly benefited high-leakage programmes.

Food Subsidies (PDS): Rs 1.85 lakh crore saved, accounting to 53 per cent of total DBT savings, which was largely due to Aadhaar-linked ration card authentication

MGNREGS: 98 per cent of wages were transferred timely, saving Rs 42,534 crore through DBT-driven accountability

PM-KISAN: Rs 22,106 crore saved by deleting 2.1 crore ineligible beneficiaries from the scheme

Fertiliser subsidies: Sales of 158 lakh MT of fertiliser were reduced, saving Rs 18,699.8 crore through targeted disbursement

These sector-specific savings highlight DBT’s disproportionate impact on high-leakage programs, such as food subsidies and wage schemes like MGNREGS. The system’s role in biometric authentication and direct transfers has been crucial in improving efficiency and curbing misuse.

CORRELATION AND CAUSALITY FINDINGS

The correlation analysis further underscores the effectiveness of DBT in improving welfare delivery.

Strong Positive Correlation (0.71): There is a strong positive correlation between beneficiary coverage and DBT savings, signifying that as coverage expanded, savings increased.

Negative Correlation (-0.74): There is a significant negative correlation between subsidy expenditure as a percentage of total expenditure and welfare efficiency, highlighting the reduction in waste and leakages facilitated by DBT.

WELFARE EFFICIENCY INDEX (WEI)

As part of the methodology for assessing the impact of the DBT system, Welfare Efficiency Index (WEI) was developed as a composite metric to measure efficiency gains across various dimensions. WEI comprises three weighted components:

The rise in WEI from 0.32 in 2014 to 0.91 in 2023 quantifies systemic improvements, emphasising that efficiency gains stem from multi-dimensional factors — not merely budget cuts. This index provides a replicable model for global policymakers to evaluate welfare reforms.

WEI surged, driven by DBT savings Rs 3.48 lakh crore cumulative leakage reduction, subsidy reduction declined from 16 to 9 per cent of total expenditure, and beneficiary growth recorded a 16-fold expansion in coverage.

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