Redefining direct benefit transfers Premium

The benefits are long-term compared to the short-lived happiness of freebies

The concept of Direct Benefit Transfer (DBT) is to directly transfer cash to the beneficiary’s bank account, empower the beneficiary to spend the amount it originally intended, and arrest the pilferage by corrupt politicians. 

So far, no political administrator in the country would have understood the spirit of DBT better than Andhra Pradesh Chief Minister Y.S. Jagan Mohan Reddy. Witnessing people’s suffering during the 3,648-km-long padayatra, he vowed to herald a qualitative change in the lives of the poor. He announced “Navaratnalu” for the 2019 election manifesto. None of the “Navaratnalu” schemes is a freebie, as he carefully designed every scheme for long-term growth and development of people’s lives. Thus, redefining DBT as development through benefit transfer.

The commitment to his promise was so strong that although during 2020-21 the State received only 29.35% of its share in central taxes against the 15th Finance Commission recommendation of 41%, Mr. Reddy was able to transfer ₹1.65 lakh crore since 2019, as part of the “Navaratnalu” schemes through DBT. He also ensured transparency in the beneficiary selection process through village/ward secretariats and the volunteer system.

To explain the effective implementation of DBT and the resultant improvement in people’s lives schemes such as the Jagananna Ammavodi, YSR Rythu Barosa, YSR Cheyutha, and YSR Aasara, which account for a large share, are discussed in this column.

Education is one of the essential tools for the long-term development of people’s lives. However, based on the Ministry of Education report for 2016-17, the Gross Enrolment Ratio (GER) for Andhra Pradesh in primary education was amongst the lowest at 84.48, as against the national average of 99. Against this backdrop, Mr. Reddy introduced the Ammavodi scheme. 

To encourage mothers to send their kids to school, the AP government is giving ₹15,000 per annum, with 75% mandatory attendance, to every mother. The Ammavodi scheme saw a steep increase in GER for girls at the secondary level. While the GER in 2015-16 was 76.48 against the national average of 80.97, it went up to 81.2 in 2019-20 against the national average of 77.8. In addition to Ammavodi, programmes such as Vidya Deevana, Vasathi Deevena, Gorumudda, Vidya Kanuka, Mana-Badi Nadu-Nedu (infrastructural improvement in government schools), English medium in schools, partnering with BYJU’s to provide quality-oriented education module to government school students and giving tabs to children entering 8th class from November 2022 to make better use of the app, along with curriculum changes at higher education level, etc., have helped revolutionise the education system and make it a model for the country.

Agriculture, one of the most important sectors, was in crisis because farmers had no access to institutional credit and were forced to take loans from money lenders at exorbitant interest rates. As a solution, Mr. Reddy announced the YSR Rythu Bharosa scheme to transfer ₹13,500 per year to 50.58 lakh farmers, totalling ₹23,875 crore DBT in the last three years. Instalments are carefully planned to help farmers during sowing and harvesting seasons.

Despite the pandemic, due to the timely DBT, the agriculture sector achieved a growth rate of 4.16%. Initiatives such as the Rythu Barosa Kendras (a one-stop solution for farmer requirements — soil testing, seeds, fertilisers, crop procurement at the village level), Sunna Vaddi, input subsidy, zero crop Insurance, etc, contributed to growth in the agriculture sector.

Women’s empowerment might merely be a vote-catching slogan elsewhere, but not in Andhra Pradesh. Realising the importance of women in society, Mr. Reddy launched the YSR Cheyutha, a scheme assisting women aged 45 to 60 from weaker sections by providing a total of ₹75,000 to 24.90 lakh women in four yearly instalments to set up micro-businesses. This amount will help existing micro-entrepreneurs start new micro-businesses, setting up small stores, buying cattle, etc. To implement this, the government partnered with several banks to provide loans, FMCG companies like ITC, Hindustan Lever and P&G to provide goods on credit, and Amul to procure milk. These measures, along with Kapu Nestham and EBC Nestham, have improved the rural economy and made women self-reliant.

The Development of Women and Children in Rural Areas (DWCRA) self-help groups (SHG) are an important part of the rural economy but due to the failed loan-waiver promise of the previous government, 23% of the SHG accounts were overdue and 11% of the SHG accounts were non-performing assests (NPAs). Mr. Reddy envisioned how the rural economy could be improved and announced the YSR Aasara scheme — supporting them in repaying their loans consistently for four years, to the tune of ₹25,517 crore. Thus, instilling confidence in both women and the banking sector.

As part of the YSR Aasara scheme, the Andhra Pradesh government has credited ₹12,758.28 crore (out of a total of ₹25,517 crore) into the bank accounts of 78.76 lakh women, who are part of 7.97 lakh SHGs in two instalments.

Critics with vested interests saw these benefits as a burden on the State’s exchequer, but Nobel Laureates such as Prof. Esther Duflo have said that these DBTs have an enduring impact compared to the short-lived happiness of freebies. “The focus on people’s welfare, especially the poor and the vulnerable, is highly impressive. The CM tried to figure out where the people’s needs were and completely proposed the schemes for their needs and toward the sustainable development goals,” Prof. Duflo said. 

Skilled youth, a vibrant agriculture sector, a healthy family, and self-made entrepreneurs are assets to the country. The government’s expenditure in creating these assets should fall under “capital expenditure”.

Avinash Iragavarapu works with the Andhra Pradesh government