If you are interested in applying to GGI's Impact Fellowship, you can access our application link here.
The Indian government, in close conjunction with state governments, has set up many welfare schemes in the country to alleviate the consequences of socioeconomic disparities in the nation. These schemes range from health related subsidies, to pension schemes, and have different eligibility criteria, and processes. However, the common link between most welfare schemes in India is the rapid pace of digital adoption; more and more fund disbursal processes now happen under DBT or the Direct Benefit Transfer route.
In this paper, we explore the six schemes that use this method of fund disbursal most often (this was found on the official DBT website, and then cross-checked by scheme before proceeding with assessing the bottlenecks and areas of improvement for each of them).
2. Janani Suraksha Yojana
A cash transfer scheme to pregnant women above 19 years who are below the poverty line for all states and to all women who deliver in a government institution in 8 identified states with low institutional deliveries.
2.1 Process of availing the benefit
2.2 Major Bottlenecks
The major bottlenecks under the Janani Suraksha Scheme can be classified into the following two categories:
2.2.1 Linked to Documentation
No Aadhar Card or Bank Account – The prescribed requirements to avail the benefit of the scheme is having a valid Aadhar card and an Aadhar linked bank account in the woman’s name. It is the responsibility of the community health worker (ASHA) to assist the pregnant women to get these documents. As per a study conducted in Puducherry, about 24.3% of beneficiaries who could not avail the scheme, had no bank account, followed by 9.7% of women not having Aadhaar card.
No Ration Card – If a pregnant woman is staying at her natal home while delivery, she finds it difficult to produce a ration card of her marital family, which prevents her from availing the benefit. 13.8% of the women faced this issue while 11% of women had not added their name in the ration card.
2.2.2 Delays and Non-Receipt of Transport Assistance
Delay in getting the cash transfer – While the guideline for getting the bank transfer is 10 days from the date of delivery, the actual median time for receipt of the transfer is 95 days. Also, only 5% of women are being paid on time. Delay in authorization on the government portal (PFMS) and bank delays are the reasons for the lag.
No grievance redressal mechanism – Due to frequent delays, the beneficiaries have to make repeated trips to the hospital to know the payment status which leads to loss of work hours as well as high transport cost, such that it exceeds the incentive amount.
Transport assistance – In the earlier system, an imprest amount of 1500 was given to ASHA workers to arrange transport for the women, this imprest amount is not given in the current regime of direct benefit transfer. Thus, women who are eligible cannot avail institutional delivery unless they or their family arranges transport. 6.2% of women did not receive family support.
Following are some potential solutions to address the above mentioned issues:
Providing access to ASHAs – As an ASHA is the primary point of contact and ideally contacts the woman six months before delivery, granting her the authority to create/update information in the health ID will allow sufficient time to address the challenges of non-availability of documents and facilitate quick disbursal at the time of delivery.
Integration with DigiLocker through CoWIN – Under the current system, the data collected from the women is entered in PFMS where it is rendered useless for further use. Instead, if the ASHA is given access to an application through an API that allows updating and verification of data collected by CoWIN which is in turn linked to DigiLocker, the data integration will be smoother.
Including bank account details – Currently, the CoWIN data includes personal data. An option to add bank account details may be added and this can be verified by the bank.
Incentive to ASHA for updating data in DigiLocker- Currently the incentive to ASHA is given in two instalments - at the time of delivery and after two months of delivery after she makes visits to assess the health of mother and child. The transport assistance can be clubbed with this instalment so that there is an incentive to fill out the ID.
3. National Scholarship Schemes
Scholarship schemes are set up to solve for financial constraints that act as barriers to primary and secondary education. They are run in tandem with state and central governments, with funds being disbursed either via DBT or through the educational institutions at which the intended beneficiaries are enrolled.
3.1 Major Bottlenecks
The major bottlenecks with these schemes include a lack of regard for prescribed timelines, the absence of an evaluation system, failure to revise eligibility criteria with inflation and a disbursal system that does not incentivize students to stay in school.
At the moment, the government is trying to fix these bottlenecks by sharing a prescriptive high-level timeline on their portals to encourage adherence and is dividing the disbursal of the final amount into two arbitrary sanctions, so as to break up the original lump sum.
However, it is proving to be quite difficult for the government to enforce this timeline and the lack of a robust monitoring as well as evaluation system makes it difficult for a central agency to keep track of how the funds are being used.
Following are some recommendations that can help fix the fund disbursal process:
Centre can incentivize state Governments to follow timelines by increasing central contribution by 1-3% when timelines are adhered to.
Governments can have local bank employees be a part of this recording of progress and tie the disbursal of funds with metrics such as attendance, cleanliness, punctuality etc. to improve efficacy of funds (this can divide fund disbursal into quarters).
Disbursal can be divided into cash and kind - book and tuition allowances can be redeemed via vouchers in kind (currently cash is redeemed via vouchers) and governments can transfer money to vendors after proof of sale to correct beneficiary via two factor authentication – same as the one used by eCommerce companies.
Governments can solve the issue with the gap in eligibility criteria by working closely with other ministries to update the socioeconomic stratifications that qualify for state financial assistance, so as to minimize leakages via exclusion of people who may earn marginally above the cutting point but can’t afford education for their children.
4. PM Kisan Scheme
PM Kisan is a government scheme through which all small and marginal farmers are entitled to receive INR 6,000 per year as minimum income support - which are payable in three equal installments of INR 2000 each, every four months. The scheme currently follows the below process to disburse funds:
4.1 Major Bottlenecks
Following are some issues in current disbursal method:
Aadhar vs PM Kisan depository mismatch
Ineligible farmers receiving funds
Database connecting land records is not immediately available and is under construction
4.2 What are the current steps being taken to fix the above issues?
1. Data Agri Stack being built up as a golden source for data on:
number of farmers availing DBT/subsidy
land holding size
what is being grown
2. UPI/NCPI Linked E-RUPI vouchers which can be used for use case specific DBT with the following benefits:
Link with the existing scheme DBT systems for registrations, applications, eligibility checks etc.
Connect with SMS/MMS/email gateways for e-RUPI voucher distribution (text-only and QR code)
Develop a system for bulk G2C pre-approved e-RUPI voucher generation - linked to identity of eligible beneficiaries
Work with banks for issuance and acceptance of e-RUPI vouchers
3. Blockchain proof of concepts for land records and benefit distribution is already being tested and their results will help in building expectations around the benefits.
4.3 What are the challenges being faced in rolling out the fix (is it completely or partly solving)?
Both e-RUPI and the Data Agri Stack are digital innovations aimed to smoothen process flow but challenge still lies at the data entry layer and the controls around it.
Robust centralized systems will give a one stop view but leaves out other players (Farmer benefit groups, NGOs, etc.) from providing recommendations.
In order to mitigate issues at the data entry layer, incentives and penalties should be introduced for data input providers and need to be recorded in the common database. This will allow help in introducing incentives and penalties in line with error rates of the data provided.
IndiaChain, conceptualized by NITI Aayog aims at being a block chain project that will operate as a platform – similar to the unified payments interface. The Data Agri Stack which is currently being built needs to be linked to IndiaChain.
5. National Social Assistance Program (NSAP)
NSAP is a social security and welfare program primarily introduced to provide social assistance benefits and support to citizens and poor households affected by unemployment, old age, sickness, disability and death of primary bread earners.
It disburses money directly to the accounts of the beneficiaries in banks or in post office savings banks or through postal money order. It provides assistance under the Old Age Pension Scheme, may also be disbursed in public meetings such as Gram Sabha meetings in rural areas and by neighbourhood/mohalla committees in urban areas.
5.1 What are the current leakages?
Cases of arbitrary rejection of applications without proper justification and time to respond back.
Unclear process for tracking the beneficiaries and their claims.
Absence of standardized process across states and a uniform structure between the center and the state governments (several states have their own widow, disabled and old age pension schemes with varying eligibility criteria).
The variation in modes of payment across the states leaves the payment pattern of NSAP unclear.
Benefits cease in case of death of the beneficiary or if the benefits are not withdrawn within a reasonable amount of time.
During the monitoring process, the progress of implementation of the schemes is to be reported through quarterly reports by the 15th of the month of the following quarter. Non reporting of the physical and financial progress reports is construed as lack of progress and therefore, may result in the non-release of additional central assistance for the last quarter of the financial year.
5.2 What are the current measures/solutions?
The Nodal Secretary dealing with NSAP in the state or the concerned district/block level Welfare Officer is approached for redressal of any complaint regarding the schemes under NSAP.
The Ministry of Rural Development is assisted by a National Social Assistance Advisory Committee for monitoring and evaluation. State governments produce monthly and quarterly progress reports when the program’s monitoring and information system is fully operational.
Governments try to disburse payments monthly, where possible, otherwise quarterly or half yearly, in advance.
Government has issued guidelines that specify that the entire process of disbursal including verification, reviews, sanction etc. must not exceed 60 days.
Some state governments like Assam, Gujarat, Jharkhand, Lakshadweep and Odisha have been boarded on NSAP-PPS (Pension Processing System) for DBT.
Four DBT workshops have been conducted during 2017-18 for capacity building in State implementing Agencies to expedite implementation of DBT under NSAP Schemes.
5.3 Challenges in rolling these solutions
Authorized officials are required to reach out to potential beneficiaries and get the application forms filled, often leading to delays and discrepancies. (NSAP currently uses BPL Criteria to identify beneficiaries (Categorical Targeting). There are roadblocks given that identification of eligible beneficiaries is a continuous process. As and when a person belonging to a BPL household (as per BPL 2002) list becomes eligible vis-à-vis specific eligibility criteria for different schemes, he/she may approach the appropriate authority for grant of pension. (18years old for IGNDPS, 40 years old for IGNWPS, 60 years old for IGNOAPS.
Onboarding of states on NSAP-PPS and online updating of pensioners details such as A/C details, mobile number, Aadhar number etc.
States that have not received the second installment in the previous financial year will have to submit proposals for first installment along with all requisite documents which were required to be submitted for the release of second installment of the previous financial year. Such processes lead to unnecessary procedural delays.
It has been observed that for the different processes under NSAP, there is a variation in timelines across states, some even take up up to 80 days.
Assistance amounts and resources vary across state governments, hence, not all states have been able to integrate disbursals with DBT.
Following are some mechanisms for improved implementation and enhanced outcomes of the scheme so that it truly serves the purpose that it seeks:
Digital transformation can help us structure governance more easily and efficiently, ensuring efficient and timely monitoring through Management Information Systems (MIS) across the states.
Disbursal through 100% DBT can be implemented across all states.
Onboarding all states on NSAP- PPS (Pension Processing System) to maintain a ‘single source of truth’.
Substantial emphasis must be laid on improving awareness levels through publicity.
Matching of BPL pensioners with SECC data. Socio Economic Caste Census (SECC) data can be used to identify beneficiaries and can further the cause of inclusion. If SECC data is used to determine the number of people instead of the current BPL criteria, coverage would double to about six crore people resulting in more inclusion.
Integration with biometrics for annual verification of pensioners through UIDAI (confirmation of the existing beneficiaries - there is a need for annual verification of the existing beneficiaries under NSAP. The states may constitute Special Verification Teams for the purpose under an authorized officer. The teams should include representatives of non-government organizations of repute which are active in the locality. Details of members of the team and the process may be given wide publicity.)
Mobile application for registration and tracking payment.
6. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), also known as Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) is an Indian legislation enacted on August 25, 2005. The MGNREGA provides a legal guarantee for one hundred days of employment in every financial year to adult members of any rural household willing to do public sector related unskilled manual work at the statutory minimum wage. The Ministry of Rural Development (MoRD), Government of India is monitoring the entire implementation of this scheme in association with state governments.
6.1 Challenges for MGNREGA
Regular payment delays - The delay in payment of wages are due to implementation issues in the states which include inadequate staffing, non-timely recording and reporting of attendance, measurement, data entry, generation of wage list, Fund Transfer Order (FTO) etc.
The banking puzzle - The rural banks are highly de-capacitated in terms of staff and infrastructure and thus always remain hugely crowded. Often, the workers do not get their wages during times of need due to the hassle and the cost involved in getting wages from the bank.
Genuine job cards being deleted to meet 100% DBT targets - Genuine job cards are being randomly deleted as there is a huge administrative pressure to meet 100 percent Direct Benefit Transfer (DBT) implementation targets in MGNREGA.
Too much centralization weakening local governance - A real-time MIS-based implementation and a centralized payment system has further left the representatives of the Panchayati Raj Institutions with literally no role in implementation, monitoring and grievance redress of MGNREGA schemes.
6.2 What are the current measures that are taken?
Creating improved financial management systems to using technology-enabled banking solutions like smart cards, social audits and building grievance redressal systems.
Attendance Management System - Can opt for an on-premise or cloud-based attendance management system, employees should be able to clock in, register break periods and clock out after the workday is complete, using either magnetic card readers or personalized phone numbers. Card readers are useful because they reduce the risk of fraud or “proxy” clocking in to measure the actual genuine workers with issued job cards.
IndiaChain by NITI Aayog - Introduction of such a blockchain network can reduce fraud, speed up enforcement of payment and increase transparency of transactions which will also reduce the intermediary services.
e-RUPI - The e-RUPI is easy, safe and secure as it keeps the details of the beneficiaries completely confidential. The entire transaction process through this voucher is relatively faster and at the same time reliable, as the required amount is already stored in the voucher. This will reduce the hassle of a banking system as it does not require the person redeeming the voucher to have a digital app or a bank account. Moreover, it can also be penetrated into the remotest of villages.
7. Pratyaksh Hanstantrik Labh (PAHAL)
Pratyaksh Hanstantrik Labh or PAHAL is a major government scheme for the disbursal of LPG subsidy. There are three oil marketing companies in India (namely - IOCL, BPCL and HPCL) that are responsible for registering the customers, disbursing LPG cylinders and later the government provides subsidy directly to the accounts of the customers. Customers pay for the cylinders in full.
Below diagram is the schematic representation of the entire cycle:
7.1 Challenges for PAHAL
It was identified that there is an increase of 261% in subscription of non-subsidized domestic cylinders with 24 cylinders a year, despite the cap of 12 cylinders by all the OMCs (CAG Report no. 25, 2016). This was despite the fact that there has been no flags by any OMCs on customers subscribing to more than 12 cylinders. Hence, there has been a duplication of records in the OMCs databases.
All OMCs have standalone databases which are not combined which led to duplication of records across OMCs.
Also there is duplication of records within the database of each OMC as well via means like multiple connections from the same households using the Aadhar number of different family members, multiple connections using different combinations of ID proofs (LPG subscription requires proof of identity and address and unfortunately multiple combinations of ID can do that).
Possibility of collusion between the dealers and the bank officials to introduce multiple ghost accounts and pocket the subsidy for the intended beneficiary.
Result is there is diversion of LPG cylinders meant for domestic use to the commercial sector which undermines the purpose of subsidy provided by the government.
7.2 Solutions for PAHAL
Based on our investigation, coming up with any specific scheme that trumps out every duplicate account may not be possible in the present scenario but what can be done is to effectively control the duplication as far as possible. If we control the duplication across OMCs we can ensure up to 34% reduction in redundant accounts. This may sound very idealistic, but even a reduction of 10% in duplication of accounts can save up to 135 crores amount of money the government may spend. It becomes important for having a common database across OMCs which can ensure grabbing out of low hanging fruits.
A scheme for combining databases in order to avoid duplication is presented below:
Apart from this collecting the geographical information based on disbursal of cylinders will help us identify the concentration areas. OMCs and administration can specifically focus on those concentration areas. Finally OMCs should also be maintaining a database for non-subsidized domestic cylinders as there may be a case for diversion of subsidies from non-subsidized domestic cylinders to the commercial sector as there is still a difference of 23% in their rates.
While each scheme comes with its own set of bottlenecks and challenges, there are certain common denominators - like the presence of monitoring and evaluation systems, along with the incorporation of a more robust disbursal process, akin to the one used in IndiaChain, that could increase the efficiency of these schemes.
Meet The Thought Leaders
Shatakshi Sharma has been a management consultant with BCG and is Co- Founder of Global Governance Initiative with national facilitation of award- Economic Times The Most Promising Women Leader Award, 2021 and Linkedin Top Voice, 2021.
Prior to graduate school at ISB, she was Strategic Advisor with the Government of India where she drove good governance initiatives. She was also felicitated with a National Young Achiever Award for Nation Building. She is a part time blogger on her famous series-MBA in 2 minutes.
Naman Shrivastava is the Co-Founder of Global Governance Initiative. He has previously worked as a Strategy Consultant in the Government of India and is working at the United Nations - Office of Internal Oversight Services. Naman is also a recipient of the prestigious Harry Ratliffe Memorial Prize - awarded by the Fletcher Alumni of Color Executive Board. He has been part of speaking engagements at International forums such as the World Economic Forum, UN South-South Cooperation etc. His experience has been at the intersection of Management Consulting, Political Consulting, and Social entrepreneurship.
Ishan Tewari is a Mentor at GGI and a management consultant. He likes to mentor young GGI fellows on weekends as a volunteer in his free time.
Personally, he is a massive sports buff and loves to share his passion by connecting with like-minded people too.
Meet The Authors (GGI Fellows)
Alekhya Chintalapati is a B.Com Hons graduate with almost 3 years of experience working with Deloitte as a Tax Analyst. She is currently pursuing a second Bachelors in Data Science and Programming from Indian Institute of Technology, Madras because she believes that technology walking hand in hand with business is the future.
Apart from academics, she has taken up the role of a Mentor at her B.Sc. as she is passionate about giving back to society and wants to touch as many lives as possible. Alekhya strongly believes in a statement by Mahatma Gandhi which says that you must be the change that you wish to see in this world. Therefore, she wants to take a step forward towards educating herself before empowering several budding leaders.
Hardik Madhiwalla is a chartered accountant and a commerce graduate from H.R College of Commerce and Economics. He has over 4 years of experience spanning the domains of corporate finance, public health and M&A advisory. He is a culture geek and bibliophile who is currently exploring a career in development finance.
Chahat Malhotra is a second year undergraduate student at Hindu College, University of Delhi. She runs a youth-led non profit organisation 'Project Parvaah' that works at the intersection of inclusion and impact. She is a Singer, YouTuber and an eternal optimist who uses music for advocacy and change.
Pooja Agrawal is a final year Bachelors of Business Administration student at the SP Jain School of Global Management. She has studied and interned with companies in Mumbai, Dubai, Madrid, and Sydney. Pooja is the Founder and President of Girl Up Sydney, an initiative to promote women empowerment, under the aegis of the United Nations Foundation. She enjoys discussions around culture, communications, and consulting.
Anureet Deb is currently working as an assistant manager for banking relations and treasury investments at BlackBuck (Zinka Logistics Solutions Pvt. Ltd.) Prior to that, Anureet was working as a Specialist in the Treasury - Capital Forecasting team with the Global Business Services unit of Standard Chartered Bank. Anureet has had the unique opportunity to be a part of Young Leaders for Active Citizenship (YLAC)’s Policy in Action Cohort of 2020. He completed his undergraduate studies in BSc. Economics from SVKM's Narsee Monjee Institute of Management Studies (NMIMS) followed by a PGDM degree from Great Lakes Institute of Management.
Rohan Sharma is a Cognitive Automation Associate at S&P Global and a graduate in Chemical engineering from IIT Guwahati. He has experience spread across the fields of Chemical and Software engineering in domains of oil & gas, air purification, energy research, machine learning and Artificial Intelligence. He always tends to explore interdisciplinary areas of work, bringing together aspects of technology and policy. He is a passionate debater and looking to explore opportunities in the field of energy.