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Direct Benefit Transfer – Is It Really Beneficial?


by Priyam Agarwalla

The government of Jharkhand introduced Direct Benefit Transfer (DBT) of cash for ration in Nagri block of Ranchi in a pilot project which was being tested as an alternative to the existing Public Distribution System (PDS) besieged by charges of corruption and inefficiency.

Under DBT, the state will transfer Rs 1,106 every month to the bank account of a beneficiary to buy 35kg rice from the PDS outlet at Rs 31.60 per kg. So far, people paid Re 1 for a kilo to the dealer, and the state paid the rest via Food Corporation.

Nagri village is located in Nagri Tehsil of Ranchi district in Jharkhand, India. As per 2009 statistics, Nagri village is also a gram panchayat. Ranchi is around 15 kms away from Nagri. The total geographical area of the village is 669.24 hectares. It has a total population of 6,118 people. There are about 1,216 houses in Nagri village.

To study the impact of this pilot project, we visited two villages on 23rd December 2017, in Nagri- Bada Khunta and Gagi Toli. Bada Khunta is a small village in Nagri which comes under the Saher panchayat while Gagi Toli comes under the Balong Panchayat. We were devastated to see the condition of people in both the villages. The conditions of both the places were quite similar. Direct Benefit Transfer has done no good to them. The main aim of this project was to reduce the leakages in the system so that people could get all they are entitled to. Alas, nothing of this sort has happened. On talking to people of the village we realized that the dealer still gives them less amount of ration. They always receive two to three kilograms less than what they are entitled to. Same is the case with each and every person in the village. People also said that the dealer chides them away whenever they ask for more and even uses foul language at times. And since these dealers are influential people, taking any action against them is a task. But this is not the major problem they are facing as at least they get something to eat.  

The major challenge that the people of these two villages face is that for many people the money is not being deposited in their accounts. It’s been only two months since this pilot project has started in such a small block and yet we are facing a challenge at the very basic level. And the saddest part is that this is the very basic component of the project. People said that ever since this scheme has started here, money has not been deposited in their account. They visit the bank several times, which is around 5 kms away, to check if the money has been deposited but each time they have to face disappointment. Further, there are no proper means of transportation which increases the predicament.The villagers need to arrange transport by themselves, and  if at all no medium is available they walk to reach their respective destination.This leads to their loss of time, energy, money and causes suffering. As a result of this even the bank employees have started getting irritated with them. Many of them have bought ration with their own money in the hope that money will be deposited in their accounts soon. Another major challenge which the people of these two villages face is that the process of withdrawing money from the banks is very long and tedious. They need to visit bank number of times to check if money has been deposited in their accounts as there is no mechanism to know whether it has been deposited or not. Additionally, there is no fixed date on which the money will be deposited during the month. They also need to stand in a queue for long as there is only one branch in the near vicinity. People say that earlier they just needed to stand in a queue just at the ration shop but now they also need to stand at the banks which leads to loss of their wages. One full day goes through the whole process and sometimes even two or more days go waste. Some of the people in order to save themselves from all this hassle avoid going to the bank and ration shop altogether.  An old man, Manshid Tirki said that “I keep going to the bank all the time but there is no money in my account. Now I am tired of all this”. We also came across cases where some of the names on the same ration card had been canceled. Priya Orain, from Bada Khunta, said that “I have a family of eight but three names out of them have been struck out of the ration card. I don’t know what to do; I don’t know where to go. How do I feed my family?” Not only this, there have also been cases where people who have not received money in their accounts have received the notice that their ration cards will be canceled as they haven’t collected their ration for the last two months. We even tried cross checking all the complaints we got during the visit, but there were no records found on the website.

It is on talking to people we realized that people are not at all happy with this system. Gulshan David of Gagi Toli said that the previous system was better. “Earlier also we used to get less and now also we get less but at least we didn’t have to face all this trouble earlier.” But at the same time, people also said that they don’t have any problem with the system, they have a problem with the implementation. It does not matter to them as to which system the government uses, the only thing which concerns them is the amount of trouble which they need to face while availing these services. They are absolutely fine with DBT too, if the money is deposited in their accounts on time and they don’t have to spend hours waiting in the queue and if everything is working well within the system.

There is a long way to go before we implement DBT in the entire state or country. There are some loopholes which need to be fixed before we take it any further. The government might say that there is a grievance redressal cell, but may I ask how many people in the village know how to go about it. Has government taken any steps to make them familiar with the process?  If we are facing so many challenges at the block level, imagine the number of challenges we are going to face at the state level. Hence, all this has to be thought over once again by the government. Although the policy is no doubt a good initiative to avoid leakages and corruption in the system, but where we lack is at the level of implementation. The government needs to develop a proper and strong infrastructure before taking such, what I would call life-changing, measures. And most importantly, if we try to implement such initiatives in a state that is amongst the most backward states in the country and has little technical know-how, the results are not going to be any less than disastrous.


Priyam Agarwalla is a first year masters student in Public Policy at Jindal School of Government and Public Policy.

Featured Image Credits: The Economic Times

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