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How DBT helps the poor in emergencies: analysis


On March 26, 2020, the government announced three-month free gas refills for Ujjwala beneficiaries facing economic challenges due to the coronavirus blockade. The policy went into effect on April 1. As of April 3, the government began transferring the grant money for the first cylinder to the bank accounts of 8.3 million Ujjwala customers, at the rate of approximately one transfer of Rs million per day.

Things were very different a few years ago. On January 26, 2001, a major earthquake, with its epicenter in Kutch, shook Gujarat, killing thousands, injuring and leaving thousands of people homeless and destroying millions of property.

In addition to organizing rescue operations, one of the first steps the state administration took was to distribute cash relief. This was, as local officials told me when I joined the Gujarat State Disaster Management Authority (GSDMA) in Kutch, one of the most difficult tasks for them. Most of the people were not in a position to bring identity documents and proof of residence. A large amount of cash had to be organized, with police deployments to handle the crowd.

Public servants involved in cash distribution were concerned: “How will I prove that I paid the cash to the eligible beneficiary? Should there be a consultation at a later date?” they wondered.

At one point, we had trouble distributing cash during emergencies in a single city. Now, thanks to Direct Benefit Transfer (DBT), we have the ability to transfer money to almost the entire country in a matter of days.

This has been possible thanks to the vision of Prime Minister Narendra Modi of JAM (Jan-Dhan, Aadhaar and Mobile), which enables a rapid response in emergency conditions.

Today, more than 121 million crore have the Aadhaar card and more than 33 million crore Jan Dhan, the basic savings accounts in banks. Under PAHAL (Pratyaksh Hastantarit Labh), the world’s largest DBT scheme, around 25 billion LPG customers are subsidized in their bank accounts.

In 2019-2020, DBT crossed Rs 2.5 lakh crore mark, for a total of 410 crore transactions. In summary, the scope of a fully electronic DBT, enabled for Aadhar, is unmatched.

Then we have the benefit under the Pradhan Mantri Garib Kalyan Yojana for Ujjwala customers who receive around 750 rupees, the average retail price of a cylinder. They also receive an SMS from their bank, updating them on the credit. Some can buy refills right away, while others can use the money for food or other necessities. In uncertain times, people are the best judges of what they need. Since most Pradhan Mantri Ujjwala Yojana customers use LPG and other biomass-based fuels, they are in the best position to make adjustments domestically.

Those who purchase a refill will receive an advance for the next refill in May and so on. Those who don’t buy a refill right away can come back later.

Some may not need to withdraw cash immediately, but knowing that there is some money in the account will give them a sense of security.

This will be fast, leak-free and will allow the oil and natural gas ministry and oil trading companies to focus on ensuring supplies, last-mile deliveries, and simultaneous field feedback.

Of course, the challenge still remains that people can withdraw money without problems while maintaining social distance. One hopes that the government and banks will also pay due attention to this aspect.

Overall, DBT will provide immediate support to poor families, allow the administration to focus on those who for some reason are excluded, and address other challenges that continue to unfold every day in the fight against Covid-19.

Nidhi Prabha Tewari is a Senior Social Sector Specialist (Consultant) at PMUY and previously worked on some Disaster Recovery Programs in India

The opinions expressed are personal.

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