Asha workers, DBT beneficiaries in focus as govt preps for elections

For a government opposed to freebies, ensuring that benefits of its schemes come early will be politically crucial

As the government prepares for five state Assembly elections in December 2023 and the Lok Sabha contest next year, it is hoping that increasing expenditure on schemes will give it significant help.

It will give larger payouts to Asha health workers and ensure by the end of September direct benefit transfer (DBT) for those eligible for central government support.

The finance ministry has asked central government ministries and departments to show how much money they have left in their ledgers against the estimated payouts from the respective schemes. To cite one example, if the petroleum and natural gas ministry expected using four tranches spread through the year to assist PAHAL scheme beneficiaries, it would be expected to use two instalments. PAHAL directly transfers subsidies to the bank accounts of beneficiaries who can use the money to buy LPG connections sold at market rates.

The central government in FY23 paid out Rs 2.05 trillion in cash for various DBT schemes, leaving out MGNREGA. The amount was 5 per cent higher than the sum in FY22 and it included payment of fixed incentives for Asha workers at Rs 2000 per month. (Please see table)

In FY24, this sum could swell by 10 per cent if the central government decides to raise the payment for Asha workers.

Direct payments are the largest pool of money the centre offers as cash support to the lower income groups in the country. While payments have since FY23 become regular due to Aadhaar and the Public Financial Management System (PFMS), government departments still need the finance ministry’s approval to authorise transfers. The government aims to help beneficiaries with cash payments early in the year.

Faster release of DBT money shall help, said Devendra Pant, chief economist at India Ratings and Research. “One of the major reasons for growth slowdown is the subdued private expenditure. Higher inflation is one of the reasons for this. While decline of inflation has pushed real wage growth into positive territory, the faster release of DBT money is likely to have a favourable impact on consumption,” he said.

The payment for Asha workers is particularly significant. A National Health Mission dashboard in 2020 said there were 10.47 lakh Asha workers but recent assessments put the number close to 14 lakh. For an average family of four that immediately means impacting 5 million people. These workers also get performance-based incentives for a varied set of activities under various National Health Programmes. Plus, states in their programme implementation plans have also been given flexibility to provide a range of monetary incentives to them. These range from a high of Rs 10,000 provided by Andhra Pradesh to Rs 3,000 by West Bengal.

Data shows that after including both cash and kind the centre in FY23 paid Rs 7.16 trillion nationwide as DBT. It covered 312 schemes across 53 ministries. The payments in FY24 will be larger.

A government official explained that given the constraints of fiscal deficit management, it will be almost impossible to announce any new scheme to please voters with handouts. As the Bharatiya Janata Party in recent state elections criticised its political rivals for offering freebies to voters, its central government cannot change its stand. But nothing stops the government machinery from reaching DBT beneficiaries sooner.

The monthly report scorecard of the department of expenditure shows that in May the centre sanctioned Rs 2 trillion as borrowing window for states. States have also been authorised to avail negotiated loans of Rs 30,176.05 crore from financial institutions run by the central government. The finance ministry has also released on time Rs 59,140.01 crore as share of central taxes and duties in May, the report card shows.

DBT mapping

In the context of early release of cash to beneficiaries, these sums are important. Proceeds from them are part of the centrally-sponsored welfare schemes which need the states to also chip in. Funds to these are routed either through the respective consolidated funds of the states or are transferred directly to state/ district level autonomous bodies and implementing agencies.

The DBT window has helped the BJP to figure out the rate of success at which these schemes have reached the people, state by state and even district wise. For instance, government data shows that in terms of transfer Uttar Pradesh ranks a poor 35 among all states, whereas neighbouring Bihar is at 27th rank. West Bengal, which is ruled by the Trinamool Congress, ranks far better. It is mostly the southern states which lead in terms of the efficiency of the transfer.

An official involved with the process said the ranking is not unexpected. Since banks are the key intermediaries for DBT transfers, states with more dense networks shall score better. This accounts for the sharp difference in the rank between Uttar Pradesh and West Bengal. Even after accounting for the presence of post offices, the asymmetry stays.

There is more. From this financial year the government is also relying on the PFMS database which shows details of choke points in the cash flow and how to solve those. This is an added benefit of the system that has integrated the core banking solution of banks handling plan funds, with state government treasuries to provide for efficient and effective tracking of fund flow to the lowest level of implementation for plan schemes of the government.

There is one more reason for the central government to push these transfers early this time. In 2024, there will be two budgets: an interim one on February 1 and the second later some time in June when a new government assumes office. The understanding in North Block, home of the finance ministry, is that spending should not be left to the last months of the year as actual disbursals could run close to the election window and create a political uproar. Instead, they should be used up now.