Chief Economic Advisor Arvind Subramanian on Thursday described the government's Direct Benefit Transfer (DBT) scheme as a "game-changer" for India.
He highlighted the fiscal impact of the DBT scheme of cash transfers which yielded savings of over Rs.12,000 crore on domestic LPG in 2014-15.
"DBT is important not only for fiscal savings ... if the government can deliver these services it would legitimise the state, it would arrest the ongoing trend of de-legitimisation of the state the world over," Subramanian said at a roundtable here on "Direct Benefit and Basic Income Transfers" organised by the International Centre for Human Development.
"By moving from a regime of subsidies to transfers, you liberate the market system to work more efficiently. That is why this would count among the first generation of reforms," Subramanian said in his illustrated talk titled "Realising the JAM vision".
JAM, which was first coined by the chief economic advisor last February in the Economic Survey, represents - Jan Dhan, Aadhar and Mobile - that will allow the transfer of benefits in a leakage-proof, targeted and cashless mode.
"The DBT scheme is, above all, a way of improving the life of the vulnerable and the poor," he said.
Subramanian went on to illustrate how pilot projects and studies show subsidy leakages to have gone down from between 12 to 25 percent in case of domestic LPG, or cooking gas.
Pointing out that though studies showed that Direct Benefit Transfer in LPG (DBTL) reduces sales of subsidised cylinders on an average by 24 percent, he, however, urged caution in extending the LPG model to kerosene, for instance, which does not have a supporting supply chain in the form of state-run oil marketing companies (OMCs).
He said that to realise the JAM vision, "government must invest in IT infrastructure towards identifying beneficiaries, as well as coordinate across ministries and states".
The "last mile challenge" in this direction is to build on the "Jan Dhan challenge", he said, indicating the direction for the future as being "payment banks, mobile money transfer and a deep network of business correspondents".
In this connection, Finance Minister Arun Jaitley said at the launch of the Digital India programme here on Wednesday: "Our financial inclusion programme is the largest in the world. In less than five months, we have opened 160 million 'Jan Dhan' accounts. The Direct Benefit Transfer scheme has been extended to 130 million people in a few months."
"As many as 110 million new insurance policies were issued in less than five weeks ... that's how technology has been used. Through Digital India, we want to change our lives and way of governance," the finance minister said.
