← All questionsGS3 · 2015 · Agriculture ·DBT Replacing Price Subsidies
QUESTION 6
GS3
12.5 marks

In what way could replacement of price subsidy with Direct Benefit Transfer (DBT) change the scenario of subsidies in India? Discuss.

WRITE IN
9 min
200 words

What the examiner wants

Discuss how moving from price subsidies to DBT changes the subsidy system.

DiscussExplain the different sides of the issue, use evidence, and finish with a balanced view.

Demand-wise check

  1. 1Price subsidy problems: leakages, diversion (kerosene, LPG to commercial use), ghost beneficiaries, market distortion≈35 words
  2. 2DBT gains: JAM-based targeting, removal of duplicates, market pricing, fiscal savings, choice for beneficiary≈35 words
  3. 3Risks: exclusion due to Aadhaar or bank failures, price rise eroding cash value, last-mile banking in remote areas (Jharkhand PDS pilot)≈35 words
  4. 4Design: phased rollout, indexing, grievance redress≈35 words

Open in about 30 words and close in about 30.

Answer plan

Problems of price subsidiesDBT advantagesRisksDesign fixesConclusion

Where marks usually go

  • Only praising DBT
  • Not explaining 'change in scenario' - fiscal and market effects

Draw this

  • Before-after flow of subsidy delivery

Value addition

  • SchemePAHAL (DBT for LPG), relaunched in January 2015, entered the Guinness Book as the world's largest cash transfer programme.MoPNG, 2015
  • ReportEconomic Survey 2014-15 proposed the JAM trinity (Jan Dhan, Aadhaar, Mobile) for targeted transfers.Economic Survey 2014-15

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