A solution for DBT in un-accessible Rural Areas:

It is well understood that providing subsidy through electronic money transfer is the most efficient
way to provide DBT.
However, the problem of limited penetration of financial institutions, especially in rural India, is the
main hindrance in full-fledged implementation of this method.
I have thought of a process which can help the govt. in better utilisation of available resources for
eclipsing this hindrance. A basic smartphone can play an important role in this process.
It is well known that mobile penetration in the rural areas of our country is high and therefore utilising
this mode for transfer of benefits can help the govt. a lot. I am aware that govt. has also initiated many
programmes for targeting mobile as a means of benefits transfer but the one I am going to explain in
the succeeding paragraphs has some unique feature which, I believe, will introduce a sense of
inclusiveness in this process on the part of common citizenry.
The proposed process may work in the following way:
(1) All the important benefits like Subsidised ration, Kerosene, LPG etc would be provide to the
villagers on market rates by the govt. run ration shops and gas agencies.
(2) For providing DBT in villages/areas where financial penetration is not sufficient, services of
local shopkeepers and if such shopkeepers are not viable the post offices can be utilized as
an alternative to banks for transfer of money. (shopkeepers and Post office hereafter called
agents)
(3) A villager after being provided items at market rate would be authorised to collect money
from such agents based on the authorisation given by the ration shop in-charge electronically.
This electronic authorisation would be sent to district headquarters from where a unique
QR-code would be sent to the individuals registered mobile. He has just to show this code to
the local agents (Shopkeepers/post office) who will scan the code through tablets especially
provided for the purpose. On scanning, the details of the individual would be matched with
the one received from the headquarters through an APP made for this purpose and details of
the transaction would be saved in the tablet. The tablets can be connected with the internet
through wireless broad band or through landline connection. The agent will than pay the
required amount to the individual and take his signature on a receipt. This all information will
also be linked to the Adhar no. of the individual through that App.
(4) For payment to the agent, especially shopkeeper, he has to take the electronically saved
record in the tablet to the nearest bank on monthly/weekly bases. The bank will verify the
transactions with the one received from the central database and authorise the payment
accordingly.
(5) To maintain initial liquidity with the shopkeeper, a system of pre-payments can be established
wherein, based upon the estimated outflow of cash subsidies in a particular area serviced by
the shopkeeper, money can be credited in his account in advance. This will ensure smooth
transfer of money without any delays. Further, to ensure accountability a separate account
for all such shopkeepers could be created, which could be solely used for such payment
purposes.
(6) To maintain motivation on the part of shopkeepers a percentage of the total transactions in a
month can be given as commission to him.
(7) This proposed system may have some flaws that can be corrected ones they come to the
picture.

The pre-requisites for this system to work properly are as follows:

a) Availability of basic smart phones with every household in such village/area. In case those BPL
families who do not have access to such phone, a QR-code printed receipt can also be issued
to them by the ration shop itself.
b) Internet access for both ration shops and the agents.
c) The dedicate App for this purpose should be created in such a way that it require minimum
human knowledge for operational purpose.
d) The database of all levels i.e. ration shops, agents, banks and district levels should be well
integrated on daily bases.
e) A well-documented database of the mobile nos. and names of the individuals.
To ensure that the subsidy goes in the right hand within a household, authorisation of payment can
be made in the name of female owner of the house.
The issue of fertilizer subsidy has to be dealt with in the same way. However, first a proper
identification of the beneficiaries for the same has to be done. For this, a proper land recording policy
needs to be created which accurately shows the land titles. As this may take some time to be
implemented, the subsidy in fertilizer can be given in the way it is been given presently.

Thank you
Rajeev Chauhan