New Delhi, April 22: India’s Direct Benefit Transfer (DBT) system has led to cumulative savings of Rs 3.48 lakh crore by curbing leakages in welfare schemes, according to a new quantitative study by the BlueKraft Digital Foundation, shared by the Ministry of Finance on Monday.
The report reveals a notable drop in subsidy allocations—from 16% to 9% of total government spending—since the rollout of DBT. It emphasizes that the digital system has significantly enhanced the efficiency of public expenditure.
The analysis, covering the period from 2009 to 2024, assesses DBT’s impact on budgetary efficiency, subsidy optimisation, and social welfare outcomes. It highlights how replacing paper-based disbursements with digital transfers has ensured that funds are delivered directly to the intended beneficiaries.
A cornerstone of the DBT system is the JAM trinity—Jan Dhan bank accounts, Aadhaar IDs, and mobile phones. To better capture DBT’s impact, the report introduces a “Welfare Efficiency Index,” which combines fiscal metrics like savings and subsidy reductions with social indicators such as beneficiary reach. The index climbed from 0.32 in 2014 to 0.91 in 2023, indicating substantial improvements in both inclusion and effectiveness.
“The data on subsidy allocation reflects a meaningful shift post-DBT, showing better fiscal efficiency even as the number of beneficiaries rose sharply,” the Ministry of Finance noted.
Report Link:
https://www.bluekraft.in/wp-content/uploads/2025/04/Shakil-Bhat_DBT-Paper_FNL-paper.pdf
Key findings:
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Pre-DBT (2009–2013): Subsidies formed 16% of total expenditure, averaging Rs 2.1 lakh crore annually, with substantial system leakages.
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Post-DBT (2014–2024): Subsidy spending dropped to 9% by 2023–24, even as beneficiary coverage grew 16-fold—from 11 crore to 176 crore individuals.
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COVID-19 Exception: While subsidies spiked during 2020–21 due to emergency support, efficiency rebounded post-pandemic, reinforcing DBT’s long-term efficacy.
“The drop in the subsidy burden, despite a surge in coverage, highlights DBT’s success in streamlining fiscal allocations. By eliminating ghost beneficiaries and intermediaries, the system redirected resources to genuine recipients without a proportionate increase in budget outlay,” the ministry’s statement concluded.
