Direct Benefit Transfer Led Financial Inclusion and Kendu Leaf Workers: A Study in Odisha

In recent decades, there has been considerable policy emphasis on the financial inclusion of previously excluded individuals. In India, the policy emphasis for financial inclusion has evolved over time. Since 1904, with the start of the cooperative movement in India, and further with nationalisation of major commercial banks in the 1960s to 1980s, and the latest Direct Benefit Transfer (DBT) mechanism, the final inclusion process has been mainstreamed. DBT is a major reform initiative of the Government of India, introduced in 2013, to reengineer the benefits-delivery process using modern Information and Communication Technology (ICT). Transferring benefits directly into Aadhaar-linked bank accounts of the intended beneficiaries is defined as DBT-enabled financial inclusion. In Odisha, Direct Benefit Transfer (DBT) was introduced by all government departments in 2015 to provide agricultural subsidies to farmers. The present study aims to understand the benefits of DBT-led financial inclusion among kendu leaf workers in Odisha. Kendu leaf activities in Odisha take place through two distinct categories, wherein a major chunk of workers are registered with the Kendu Leaf Department, GoO, which is defined as a regulated kendu leaf activity. On the other hand, kendu leaf activities also take place through private operations, which are considered deregulated. The DBT mechanism discussed in this paper is limited to the regulated activity of the kendu leaf only. The study finds that the DBT mechanism is more effective in reducing leakages and corruption in the payment system. Before the advent of DBT, multiple layers were involved in making the ultimate payment to kendu leaf workers. Now, due to DBT, corruption has decreased, and earnings are being used more effectively, in line with the preferences of the kendu leaf workers. There has been an improvement in financial empowerment, individual rights, and intra-household equity, as perceived by women kendu leaf workers. The study finds that DBT has brought about positive socioeconomic changes at the household level.