‘Thousands of crores transferred without proper verification’: CAG sounds alarm on DBT lapses

Nagpur: India’s Direct Benefit Transfer (DBT) system, conceived as a technology-driven mechanism to ensure transparency and efficiency in welfare delivery, continues to face serious operational weaknesses, Comptroller and Auditor General of India Sanjay Murthy has said. He warned that transfers amounting to thousands of crores of rupees are being credited to beneficiary accounts without sufficient verification or mandatory checks, raising concerns about data reliability and fiscal discipline.

Speaking to the inaugural batch of Indian Revenue Service (IRS) probationers at the National Academy of Direct Taxes (NADT) in Nagpur, Murthy said that despite its reform-oriented positioning, the DBT framework remains plagued by poor data integration, weak cross-verification and ineffective controls to prevent duplication.

‘One ministry, multiple databases’

Murthy observed that the issues affecting DBT are as much institutional as they are technological. He highlighted the extent of siloed functioning within government departments, stating, “The level of siloed working within government departments is such that even joint secretaries within the same Ministry do not refer to a common beneficiary database.” Such fragmentation, he noted, weakens safeguards designed to stop duplicate entries and payments to ineligible beneficiaries in a great manner.

Although the government often presents the Jan Dhan–Aadhaar–Mobile (JAM) trinity as the cornerstone of DBT reforms, Murthy said the actual quality of beneficiary databases and the reliability of the reports generated from them remain well below expectations.

Aadhaar-based schemes still vulnerable

The CAG clarified that Aadhaar-linked schemes are not automatically protected from duplication or misuse. He pointed out that de-duplication and cross-database verification processes mandated under the DBT Mission are frequently weak or missing altogether.

As a result, substantial public funds continue to be disbursed without basic checks on beneficiary identity, eligibility or duplication. While Murthy did not allege intentional wrongdoing, he stressed that minimum standards of accuracy and accountability in public expenditure are non-negotiable.

‘India cannot follow a uniform yardstick’

Acknowledging the challenges posed by India’s scale and diversity, Murthy said a one-size-fits-all approach to technology-driven governance is unrealistic. “India is a vast country, and we cannot apply the same yardstick everywhere,” he remarked.

He noted that southern states have benefited from an early technological advantage, resulting in more mature datasets and stronger audit outcomes. In contrast, several other states continue to rely on fragmented or underdeveloped databases, weakening oversight of DBT-linked welfare schemes.

Technology reshaping audit processes

Despite persistent gaps, the CAG highlighted the transformative role of technology in auditing. Digital tools have remarkably reduced audit timelines, enabling social sector audits to be completed within 45 days, compared to much longer cycles in the past.

Murthy said audit capacity has also expanded, allowing up to seven government schemes to be audited simultaneously. As an external auditor, the CAG’s office can now access and correlate data across multiple schemes, making it easier to identify inconsistencies and irregularities.

Encouraging young IRS officers to adopt a data-driven mindset, Murthy said closer collaboration between tax authorities and audit institutions could strengthen scrutiny across both revenue and welfare systems.

He also pointed to the vast potential of datasets maintained by agencies such as the Ministry of Road Transport and Highways, the Goods and Services Tax Network (GSTN) and state-level Integrated Financial Management Systems (IFMS). Better integration and utilisation of these databases, he said, could enhance transparency and financial control in a big way.

Policy analysts see the CAG’s remarks as a clear warning to the government. While DBT has reduced intermediaries and curtailed traditional leakages, persistent weaknesses in data quality, inter-departmental coordination, and real-time verification risk undermining public confidence in the system.

Experts argue that for DBT to remain credible and effective, the government must urgently strengthen data-sharing frameworks, introduce real-time validation mechanisms, and reinforce audit architecture.