1.
Introduction
India has long faced the challenge of delivering welfare benefits effectively to its citizens.
Subsidies and social security schemes were often plagued with leakages, corruption, and
exclusion of genuine beneficiaries. Middlemen, duplicate ration cards, and fake identities
drained public resources, leaving the poor vulnerable.
To tackle these challenges, the Government of India introduced the Aadhaar programme in
2009 under the Unique Identification Authority of India (UIDAI). Aadhaar provided every
resident with a 12-digit unique identification number linked to biometric and demographic
data. Later in 2013, the Direct Benefit Transfer (DBT) system was launched to transfer
subsidies and welfare benefits directly into Aadhaar-seeded bank accounts. This
combination of UID and DBT transformed welfare delivery, bringing greater efficiency,
transparency, and inclusion.
2. Objectives of the Study
This project aims to:
- Understand the origin and concept of Aadhaar (UID) and Direct Benefit Transfers (DBT).
- Examine how UID has strengthened DBT in reducing leakages and corruption.
- Analyze the role of UID–DBT in promoting financial inclusion and good governance.
- Study case examples such as PAHAL, MNREGA, and PM-Kisan.
- Provide findings and suggestions for strengthening UID-enabled DBT in the future.
3. Research Methodology
This project is based on secondary sources of data:
- NCERT Economics textbooks and CBSE resources.
- Reports from the Ministry of Finance and UIDAI.
- Government publications and portals such as [Link].
- Articles from newspapers and magazines like The Hindu, Business Standard, and
Economic Times.
- Research papers and World Bank reports on Aadhaar and DBT.
The data has been presented in a descriptive and analytical manner with case studies,
government reports, and observations.
4. Concept and Features of UID–DBT
Concept:
Aadhaar is a 12-digit unique identity number issued to residents of India, based on
biometric (fingerprints, iris scan) and demographic details. Direct Benefit Transfer is a
mechanism through which subsidies and benefits are directly credited into beneficiaries’
bank accounts linked with Aadhaar.
Key Features:
- Universal identity: Aadhaar provides a unique identity to all residents.
- Biometric verification: Ensures authenticity of beneficiaries.
- Bank linkage: UID is linked with Jan Dhan bank accounts for direct transfers.
- Transparency: Reduces chances of duplication and corruption.
- Technology-driven: Uses digital platforms for speed and accuracy in transfers.
5. Importance of UID in DBT
The integration of UID with DBT has been transformative for India’s welfare system:
- Financial Inclusion: Helped crores of citizens, especially rural poor, access banking
facilities.
- Reduction in Leakages: Eliminated ghost beneficiaries and reduced corruption.
- Targeted Delivery: Ensured subsidies reach genuine beneficiaries.
- Government Savings: Saved lakhs of crores of rupees by cutting down misuse.
- Strengthening Trust: Built greater confidence in welfare schemes among citizens.
6. Role of UID–DBT in Good Governance
UID-enabled DBT has become a cornerstone of digital governance in India. It has ensured
accountability, transparency, and timely delivery of benefits. The JAM Trinity – Jan Dhan
accounts, Aadhaar, and Mobile connectivity – has created an integrated system that
minimizes errors and maximizes reach. By reducing leakages and empowering citizens,
UID–DBT has strengthened the overall framework of governance.
7. Case Studies / Examples
1. LPG Subsidy (PAHAL):
Earlier, lakhs of fake LPG connections led to massive subsidy losses. With Aadhaar linkage,
consumers received subsidy directly in their bank accounts, eliminating middlemen.
Government savings exceeded ₹50,000 crore.
2. MNREGA:
Wages under MNREGA were often delayed and siphoned off by intermediaries. Aadhaar-
enabled DBT ensured wages were directly credited to workers’ accounts, improving trust
and transparency.
3. PM-Kisan:
Launched in 2019, PM-Kisan provides ₹6,000 annually to farmers. Through Aadhaar-linked
transfers, farmers receive funds without delays, empowering rural households.
8. Government Initiatives
- PAHAL (LPG subsidy scheme).
- Direct benefit payments for pensions, scholarships, and MNREGA.
- PM-Kisan Yojana for farmers.
- National Scholarship Portal for students.
- Social security pensions directly credited to elderly and disabled citizens.
These initiatives showcase the government’s efforts to expand the DBT platform across
multiple sectors.
9. Findings and Analysis
- UID–DBT has saved significant public resources and curbed corruption.
- It has promoted financial literacy and banking habits among rural households.
- Beneficiaries report faster and fairer delivery of benefits.
- However, challenges such as biometric failures, rural connectivity issues, and privacy
concerns remain.
Overall, UID–DBT has been a positive reform, though continuous improvement is needed.
10. Suggestions
- Improve authentication technology to avoid biometric failures.
- Provide offline alternatives for areas with weak connectivity.
- Strengthen data protection and privacy safeguards.
- Expand financial literacy programmes in rural areas.
- Enhance grievance redressal systems for excluded beneficiaries.
11. Conclusion
The role of UID in Direct Benefit Transfers marks a significant reform in India’s welfare
delivery system. Aadhaar-linked DBT has reduced corruption, improved efficiency, and
promoted financial inclusion. Case studies like PAHAL, MNREGA, and PM-Kisan
demonstrate its success in reaching millions of households.
While challenges remain, UID–DBT has already transformed governance in India. With
continued improvements, it will remain a cornerstone of inclusive growth and digital
governance in the years ahead.
12. Bibliography
- NCERT Economics Textbooks (Class XI & XII)
- UIDAI official website: [Link]
- Ministry of Finance and DBT Bharat Portal
- The Hindu, Business Standard, Economic Times articles
- World Bank reports on Aadhaar and financial inclusion
- Yojana and Kurukshetra magazines for case studies on DBT
