The Government of India is set to conduct a comprehensive verification of beneficiaries receiving direct benefit transfers (DBTs) under major central welfare schemes by December 2025. This exercise aims to update and cleanse beneficiary data ahead of the Finance Commission cycle starting April 2026. The verification will involve Aadhaar-based KYC checks in collaboration with state governments to eliminate discrepancies between centre and state records.
Purpose of the Verification Exercise
The government plans to ensure that all beneficiaries of social welfare schemes hold Aadhaar cards linked to their bank accounts. This step is crucial for authenticating beneficiaries and preventing fraud. The exercise will cover schemes like Ujjwala Yojana, PM-Kisan, free food distribution, PM Awaas Yojana, and the Public Distribution System. It is intended to improve the efficiency and targeting of welfare programmes.
Scope and Methodology
Each ministry will conduct Aadhaar-enabled KYC verification. The process will include collecting additional documents such as Aadhaar details of family members or other relevant information as per ministry requirements. This wider data collection aims to strengthen beneficiary identification and reduce errors in DBT delivery. The verification will be more extensive than previous exercises.
Role of Aadhaar and AEPS
Aadhaar seeding alone is no longer sufficient. The government mandates that all future DBT disbursements must use the Aadhaar Enabled Payment System (AEPS) for authentication. AEPS ensures secure and direct transfer of benefits, reducing leakages. This policy will be applied from the next financial year, affecting the design of all upcoming schemes.
Impact on Welfare Schemes
The verification will help identify inactive or ineligible beneficiaries. For example, in FY25, about 22 million beneficiaries did not claim free grains for periods ranging from 3 to 12 months. This could indicate either data gaps or changed eligibility. Such insights will enable the government to adjust scheme criteria and improve targeting, thereby enhancing scheme effectiveness.
Growth of Direct Benefit Transfers
DBT expenditure has surged remarkably over the past decade. From around ₹7,000 crore in 2014, it has increased to ₹6.83 lakh crore in FY25. This growth reflects the government’s commitment to digitising subsidy flows and improving transparency in welfare delivery. The upcoming verification exercise is part of ongoing efforts to optimise DBT implementation.
Questions for UPSC:
- Discuss the role of Aadhaar Enabled Payment System (AEPS) in enhancing the efficiency of Direct Benefit Transfers in India.
- Critically examine the challenges in implementing large-scale beneficiary verification exercises in social welfare schemes in India.
- Explain the impact of digital financial inclusion on poverty alleviation and social welfare delivery with suitable examples.
- With suitable examples, discuss the significance of updating beneficiary databases in government welfare programmes and its impact on fiscal management.
