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Direct Benefit Transfer for Electricity

Direct Benefit Transfer for Electricity


GS 3 ||Economy ||Infrastructure ||Power

Why in News:

Central and State both the governments have agreed on draft amendments to the electricity the national tariff policy, delivering the electricity subsidies directly into the consumers’ account.

DBT (Direct Benefit Transfer):

  • Purpose was to reform government delivery system by using technology and processes in welfare schemes for simpler and faster flow of information/funds and to ensure accurate targeting of the beneficiaries, de-duplication and reduction of fraud.
  • Started on January 1, 2013
  • Two major programs benefitted by DBT – PAHAL (LPG subsidy scheme) and MGNREGA.
  • Linking DBT with Aadhaar information and ID platform is a major achievement.
  • Student Scholarship schemes and National Child Labour Project are also brought under the umbrella of DBT.
  • 56 ministries are purveying the citizens with 433 Schemes by the help of DBT.
  • Better targeting of the consumers has become possible.
  • Behaviour change as it inspires for more digitization of the infrastructure.
  • Reduce wastage of the public’s fund.

Present State:

Presently, State government provides subsidy to the discoms companies and later the discom provides electricity to the consumers at subsidized rates.

Rajasthan government has proclaimed to transfer the subsidy amount into the users’ accounts.

Predicaments of Electricity DBT:

  • Overestimation – 90% of the subsidy will be provided to the agrarian and residential consumers. But most of the beneficiaries are unmetered electricity connections and thus subsidy will be provided on assumption as the real and accurate data of the metered consumption won’t be able to be deduced. This assumption will lead to overestimation of the subsidy.
  • Identification – of the beneficiaries. E.g if the consumer be a tenant, so she/he would consume the electricity. But the subsidy will be deposited into the account of property owner as the connection will be in the name of the owner. Identification of tenants is not an easy way for the any entity, be the state or even the discoms.
  • Prior Deposition – Consumer will have to make prior payment and consumer will entertain the subsidy later. So, by actions, firstly, unsubsidized amount will be disposed to the consumer to pay later on s(he) will receive the subsidy. Unsubdized amount may be bigger than the subsidized one.
  • Delay in Payment – State governments will pay first to the discoms and then they will deliver the subsidy to the consumers. But, if the delay by the discoms happens to be more in time, it will create dilemma to the consumers to whether make the prior payments or not.

Way Ahead:

  • Amendment of Section 65 of Electricity Act can be done to provide a regulatory mandate adopted by the state.
  • Attention to ongoing pilots and more large-scale pilots, e.g. Gujarat and Punjab are working on the pilot projects of electricity dbt.
  • Monitoring, evaluation and learning by the stake holders
  • Third party audits authorized by regulatory commissions.