Rule 87 of The General Financial Rules 2017 Direct Benefit Transfer

Original Rule Text

Rule 87 Direct Benefit Transfer. (1) Transfer of benefits should be done directly to beneficiaries under various Government Schemes and Programmes using Information and Communication Technology (ICT). Necessary process reengineering to minimise intermediary levels and to reduce delay in payments to intended beneficiaries with the objective of minimising pilferage and duplication should be done for all Government Schemes and Programmes. The process for implementation of DBT as prescribed should be adopted. (2) DBT should include in-kind and cash transfers to beneficiaries as well as transfers/honorariums given to various enablers of government schemes like community workers, etc. for successful implementation of the schemes. (3) Transfer of cash benefits from Ministries/Departments should be done (a) directly to beneficiaries from Ministries/Departments; (b) through State Treasury Account; or (c) through any Implementing Agency as appointed by Central / State Governments. (4) In-kind Transfer to Individual Beneficiary/ Household/Service provider includes schemes or components of schemes where in-kind benefits are given by the Government or through any Implementing Agency as appointed by Centre/State Governments to Individual Beneficiary/ Household/ Service providers. (5) Ministries/Departments will use PFMS platform for processing of payments for cash / in kind transfers to individual beneficiaries as per framework laid down by Department of Expenditure, Ministry of Finance. (6) Implementing Agencies shall generate Electronic Utilisation Certificate (E-UCs) on PFMS portal and submit them online. E-UCs shall be used to certify that money was actually utilized for the purpose for which it was sanctioned to eliminate the need for physical generation of UCs. (7) Transaction charges for the financial intermediaries facilitating DBT payments shall be paid as stipulated by Ministry of Finance.

Visual Summary

Direct to Beneficiaries

Minimizes pilferage and delays using ICT.

Cash & In-Kind Transfers

Covers both monetary and physical benefits.

PFMS for Payments & E-UCs

Ensures efficient processing and online certification.

Executive Summary

Rule 87 of The General Financial Rules, 2017, outlines the framework for Direct Benefit Transfer (DBT) in Government schemes and programmes. It mandates the direct transfer of benefits to beneficiaries using Information and Communication Technology (ICT) to minimize intermediaries, pilferage, and delays. DBT encompasses both cash and in-kind transfers, including honorariums for community workers. Payments can be routed directly from Ministries/Departments, through State Treasury Accounts, or via appointed Implementing Agencies. The Public Financial Management System (PFMS) is designated for processing these payments and for generating Electronic Utilisation Certificates (E-UCs) to ensure proper fund utilization and eliminate the need for physical UCs. Transaction charges for financial intermediaries are also stipulated by the Ministry of Finance.

In-Depth Analysis of the Rule

Direct Benefit Transfer (DBT) represents a significant reform in the delivery of government services and subsidies, aiming to enhance transparency and efficiency. Rule 87 of The General Financial Rules, 2017, provides the foundational principles and operational mechanisms for implementing DBT across various government schemes.

Breakdown of the Rule:

Rule 87(1) – Core Principle of Direct Transfer: This sub-rule establishes the primary objective of DBT: to transfer benefits directly to beneficiaries using ICT. It emphasizes process reengineering to reduce intermediary levels, minimize pilferage, and prevent duplication, thereby ensuring efficient and timely payments.
Rule 87(2) – Scope of DBT: DBT is not limited to monetary transfers. It explicitly includes both in-kind benefits (e.g., food grains, fertilizers) and cash transfers. Furthermore, it covers payments like honorariums to community workers and other enablers crucial for the successful implementation of schemes.
Rule 87(3) – Channels for Cash Transfers: For cash benefits, the rule specifies three permissible channels: direct transfer from Ministries/Departments to beneficiaries, transfer through State Treasury Accounts, or transfer via any Implementing Agency appointed by Central/State Governments.
Rule 87(4) – In-Kind Transfers: This clarifies that in-kind transfers, whether provided directly by the Government or through an Implementing Agency, are also part of the DBT framework for individual beneficiaries, households, or service providers.
Rule 87(5) – PFMS Platform for Payments: Ministries and Departments are mandated to use the Public Financial Management System (PFMS) for processing all cash and in-kind transfers to individual beneficiaries, adhering to the framework set by the Department of Expenditure, Ministry of Finance.
Rule 87(6) – Electronic Utilisation Certificates (E-UCs): Implementing Agencies are required to generate and submit E-UCs online via the PFMS portal. This digital certification aims to confirm the actual utilization of funds, eliminating the need for traditional physical Utilization Certificates.
Rule 87(7) – Transaction Charges: The rule addresses the payment of transaction charges for financial intermediaries involved in facilitating DBT payments, stating that these charges shall be paid as stipulated by the Ministry of Finance.

Practical Example:

Consider a government scheme providing financial assistance to farmers for purchasing seeds. Under Rule 87, instead of routing funds through multiple district and block-level offices, the Ministry of Agriculture would directly transfer the cash benefit to the farmers’ bank accounts using the PFMS platform. The implementing agency at the state level would then generate an E-UC on PFMS, certifying that the funds were indeed disbursed to the intended farmers for seed purchase, thus ensuring transparency and reducing administrative overhead.

Related Provisions

Rule 87 on Direct Benefit Transfer is closely linked with several other provisions in The General Financial Rules, 2017, that govern financial management and accountability:

Rule 86 of The General Financial Rules 2017 Public Financial Management System PFMS: This rule details the mandatory use of PFMS for various financial operations, including DBT, sanction preparation, and fund flow management, directly supporting the mechanisms outlined in Rule 87.
Rule 70 of The General Financial Rules 2017 Duties and Responsibilities of the Chief Accounting Authority: The Chief Accounting Authority is responsible for ensuring public funds are used for their intended purpose efficiently and transparently, which is a core objective of DBT.
Rule 238 of The General Financial Rules 2017 Utilization Certificates: This rule governs the submission and scrutiny of Utilization Certificates, which are crucial for accountability in grants-in-aid, and is directly complemented by the E-UCs concept in Rule 87(6).

Learning Aids

Mnemonics:

DBT: Direct Benefits Transferred – Think of it as ‘Delivering Benefits Transparently’ to remember the core purpose.

Process Flowchart:

Multiple Choice Questions (MCQs)

1. What is the primary objective of Direct Benefit Transfer (DBT) as per Rule 87(1) of The General Financial Rules, 2017?

A) To increase the number of intermediary levels in benefit delivery.
B) To minimize pilferage and duplication using ICT.
C) To delay payments to intended beneficiaries.
D) To centralize all financial transactions without digital tools.

Show Answer

Correct Answer: B) To minimize pilferage and duplication using ICT.

2. According to Rule 87(2) of The General Financial Rules, 2017, what types of transfers does DBT include?

A) Only cash transfers to individual beneficiaries.
B) Only in-kind transfers to households.
C) Both in-kind and cash transfers, including honorariums for enablers.
D) Transfers exclusively for government employees.

Show Answer

Correct Answer: C) Both in-kind and cash transfers, including honorariums for enablers.

3. Which of the following is NOT a permissible channel for transferring cash benefits from Ministries/Departments under Rule 87(3) of The General Financial Rules, 2017?

A) Directly to beneficiaries from Ministries/Departments.
B) Through State Treasury Account.
C) Through any Implementing Agency appointed by Central/State Governments.
D) Through private commercial banks without government oversight.

Show Answer

Correct Answer: D) Through private commercial banks without government oversight.

4. Which platform are Ministries/Departments required to use for processing DBT payments for cash/in-kind transfers to individual beneficiaries, as per Rule 87(5) of The General Financial Rules, 2017?

A) National Payments Corporation of India (NPCI) portal.
B) Reserve Bank of India (RBI) payment gateway.
C) Public Financial Management System (PFMS).
D) State Bank of India’s corporate banking platform.

Show Answer

Correct Answer: C) Public Financial Management System (PFMS).

5. What is the purpose of Electronic Utilisation Certificates (E-UCs) as described in Rule 87(6) of The General Financial Rules, 2017?

A) To increase the administrative burden on Implementing Agencies.
B) To certify that money was actually utilized for the sanctioned purpose, eliminating physical UCs.
C) To track the physical delivery of in-kind benefits only.
D) To replace the need for any form of financial reporting.

Show Answer

Correct Answer: B) To certify that money was actually utilized for the sanctioned purpose, eliminating physical UCs.

Frequently Asked Questions

What is Direct Benefit Transfer (DBT) under The General Financial Rules, 2017?

DBT, as per Rule 87, is a mechanism for the direct transfer of benefits from government schemes and programmes to beneficiaries, utilizing Information and Communication Technology (ICT). Its core aim is to streamline the delivery process, reduce intermediaries, and minimize pilferage and delays.

How does Rule 87 of The General Financial Rules, 2017, ensure transparency and accountability in benefit transfers?

Rule 87 ensures transparency and accountability through several provisions: mandating direct transfers via ICT to minimize intermediaries (87(1)), requiring the use of the PFMS platform for payment processing (87(5)), and introducing Electronic Utilisation Certificates (E-UCs) for online certification of fund utilization (87(6)). These measures reduce opportunities for misuse and provide a clear audit trail.

What is the role of PFMS in the implementation of DBT as per Rule 87 of The General Financial Rules, 2017?

The Public Financial Management System (PFMS) plays a crucial role in DBT implementation. Rule 87(5) mandates Ministries/Departments to use PFMS for processing all cash and in-kind transfers to individual beneficiaries. Additionally, Rule 87(6) requires Implementing Agencies to generate and submit Electronic Utilisation Certificates (E-UCs) online through the PFMS portal, thereby digitalizing the certification of fund utilization.

Key Takeaways

Rule 87 mandates Direct Benefit Transfer (DBT) using ICT to minimize intermediaries, pilferage, and delays in government schemes.
DBT covers both cash and in-kind transfers, including payments to scheme enablers like community workers.
Payments can be made directly from Ministries/Departments, through State Treasury Accounts, or via appointed Implementing Agencies.
The Public Financial Management System (PFMS) is the designated platform for processing DBT payments and generating Electronic Utilisation Certificates (E-UCs).
E-UCs eliminate the need for physical utilization certificates, enhancing efficiency and accountability.

Conclusion

Rule 87 of The General Financial Rules, 2017, is a cornerstone of modern financial governance in India, championing transparency, efficiency, and direct accountability in the delivery of public benefits. By leveraging technology and streamlining processes, it aims to ensure that government support reaches the intended beneficiaries effectively, minimizing leakages and maximizing impact.

Continue to Rule 88 →