G2P (Government to Person) payments have been common in India for a long time but questions are consistently raised as to whether the payments reach the intended beneficiary. In addition to this, the convenience, cost, efficiency, and certainty with which a beneficiary can avail, and then withdraw, the benefit payment also remain under scrutiny. As a result, with G2P payments such a key part of government strategy, there is a great deal of focus on ensuring timely, effective and convenient delivery to the intended beneficiary.
Electronic Direct Benefit Transfer (EBT) is one way to transfer funds electronically from the relevant department/treasury to individual beneficiaries’ bank accounts. EBT seeks to minimize leakages at the same time improving upon the time it takes to transfer funds. However successful implementation hinges on successful withdrawal, and for this, there has to be a network of available and accessible “Cash-In-Cash-Out” points servicing beneficiaries within their vicinity.
The core value adds are that:
- the government saves by weeding out ghost beneficiaries, speedy transfers, and unauthorized withdrawal,
- beneficiaries avail such benefits in the village itself, without incurring traveling cost, ‘service charge’ to middle-men and loss of wages.
It is indeed a win-win situation if achieved … but an implementation of DBT/EBT has thrown up more challenges than policymakers ever anticipated.
Typically there are a host of stakeholders involved in the entire process. These might differ depending on if it is Aadhaar based DBT or non-Aadhaar based one. But the diagram outlines the generic system.
It is evident from the above diagram that it is a multi-stakeholder process, and calls for a seamless coordination between a large number of players … and this is where the fundamental challenge lies.
At the front-line, beneficiaries must interact with:
- The district administration for scheme-related matters such as enrollment and updates in the beneficiary details, etc.
- Financial institutions and their cash-in cash-out (CICO) networks for account opening, linking or “seeding” of Aadhaar number (if Aadhaar authentication is used), checking account status, and financial transactions.
There is also back-end coordination and interaction between different stakeholders, but beneficiaries are not aware of these and there is no role they can directly play in them, so we do not discuss them here.
The Government of India announced more than 100 districts for Aadhaar based DBT roll out, and in addition, state governments have other such programmes in other districts. But there does not seem to be any clear basis for choosing the districts for rollout. This leads us to a very basic question: Could there be a tool that helps governments to decide which districts to choose for DBT roll out depending on districts’ readiness level? And, of course, this tool may also help us all to understand which areas need focus for successful roll out.
In the next blog in this series, we will discuss how MicroSave has responded to this challenge and developed “district readiness assessment” (DRA) tool, to assess the readiness of a district to deliver EBTs.