Definition
Direct Benefit Transfer (DBT)
Direct Benefit Transfer is the routing of government subsidies and welfare payments straight into beneficiaries' bank accounts to cut leakage and middlemen.
DBT uses the JAM trinity — Jan Dhan bank accounts, Aadhaar identity and mobile numbers — to send subsidies and scheme payments directly to citizens. By eliminating intermediaries and ghost beneficiaries, it has reduced leakage in programmes ranging from LPG subsidy to wage payments and pensions.
For public finance, DBT improves the efficiency of welfare spending and supports subsidy rationalisation. It has also deepened financial inclusion by giving crores of households a reason to use formal bank accounts, reinforcing the impact of schemes like PM Jan Dhan Yojana.
Related terms
- Subsidy RationalisationSubsidy rationalisation is the effort to make government subsidies on food, fertiliser and fuel more targeted and fiscally sustainable.
- Pradhan Mantri Jan Dhan YojanaPM Jan Dhan Yojana is the financial inclusion scheme that provides basic, no-frills bank accounts to unbanked households, often with overdraft and insurance benefits.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.