Budget 2016: DBT extension to food and kerosene subsidies will reduce subsidy bill

The Direct Benefit Transfer may emerge as a budget hero in as the government aims to extend it to largest subsidy item – food subsidy in the next budget.

Along with food, linking kerosene subsidy with DBT is in the time table of the government. Ground works are completed for providing kerosene subsidies through DBT.

Food subsidy is the largest subsidy item for the centre with nearly Rs 1.24 lakh crore outlays out of the 2.43 crore total subsidy expenditure in the last budget.

According to officials, delivering food subsidy through DBT will save around Rs 25000 crore. In the same way, extending kerosene through DBT may save another ten thousand crores.

For the DBT extension to food subsidy, states are making automation of nearly 5.4 PDS shops. Point to Sale facilities are already set up by many union territories for the implementation of DBT in food subsidy.

Almost all states have automated the PDS making the identification of beneficiaries and linking of the transfer Aadhaar oriented.

Systematic identification of the beneficiaries and linking the transfer with Aadhaar will reduce leakages. According to the Shanta Kumar Committee on FCI restructuring, nearly 47% of the food subsidies are diverted.

Finance Minister Arun Jaitely has held a meeting with officials of different departments on Monday to evaluate the efficiency of DBT. The meeting has discussed the prospects of bringing the PDS food subsidy through DBT.

The total benefit of using DBT platform for giving subsidies will be substantial. Already, PAHAL has brought down government’s subsidy outlay for LPG. Reduced prices of LPG along with extending DBT to kerosene will bring down fuel subsidy bill in the next budget.

Altogether, DBT and Aadhaar are going to save thousands of crores rupees for the government and thus to help the government to ensure fiscal stability in the next budget.