Electronic cash transfer system for the welfare schemes is an ambitious project to minimize corruption,…

Question

Electronic cash transfer system for the welfare schemes is an ambitious project to minimize corruption, eliminate wastage and facilitate reforms. Comment.

Ghissu Editorial · Accepted Answer

Electronic cash transfer curbs corruption and waste by paying benefits straight into Aadhaar-linked accounts, but it is a reform tool rather than a cure, since exclusion, last-mile banking and data errors persist. A 2025 study cited by PIB credits DBT with cumulative savings of ₹3.48 lakh crore.

**Introduction**

Direct Benefit Transfer, launched on 1 January 2013, pays scholarships, pensions and subsidies straight into Aadhaar-linked bank accounts to answer Rajiv Gandhi's 1985 remark that only 15 paise of a rupee reached the poor. It aims at corruption, waste and reform together.

**How Electronic Transfers Serve the Three Goals**

SKETCH: flow | Electronic Transfer Pipeline
- Digitised beneficiary list
- Aadhaar seeding
- Direct bank credit
- Last-mile withdrawal

1. **Curbing corruption**: Removing cash-handling intermediaries cuts petty bribes, and deleting 1.71 crore ineligible PM-Kisan names saved about ₹9,000 crore in FY 2024 (NITI Aayog, 2025).
2. **Ending wastage and enabling reform**: A 2025 study cited by PIB credits DBT with cumulative savings of ₹3.48 lakh crore, while PAHAL and the Give It Up campaign showed how transfer data allow subsidies to be capped and targeted.

**Why the Ambition Needs Caution**

1. **Exclusion by technology**: Muralidharan, Niehaus and Sukhtankar's randomised Jharkhand study found biometric authentication raised beneficiaries' costs without cutting leakage much.
2. **Cash versus kind**: Cash loses value with food inflation, and gram sabhas in Ranchi's Nagri block resisted the 2017 cash-for-ration pilot until it was rolled back.
3. **Last mile and data**: Sparse business correspondents make villagers pay commissions and recreate middlemen, and NITI Aayog (2025) finds erroneous or duplicate records still inflate outlays by 4 to 7% a year.

**Conclusion**

Electronic transfer is a sound tool against corruption and waste where benefits are already cash, but it is a reform instrument, not a cure. Offline fallbacks, grievance redress and a choice between cash and kind keep efficiency from costing the last beneficiary.

Electronic cash transfer system for the welfare schemes is an ambitious project to minimize corruption, eliminate wastage and facilitate reforms. Comment.

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