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Linking Aadhaar to bank accounts improve efficiency in subsidy payments at KVIC

New Delhi: The Khadi and Village Industries Commission (KVIC) has been able to improve the efficiency of subsidy paid under Marketing Development Assistance (MDA), thanks to the linkage of the payment with Aadhaar. 

It can be seen that the implementation of online Direct Benefit Transfer (DBT) system through Aadhaar-seeded bank accounts in January 2016 has brought about a reduction in the subsidy amount as well as the number of institutions claiming the subsidy. KVIC Chairman Shri Vinai Kumar Saxena categorically explains the reason.

“The KVIC rank and file – right from CVO, directors and members were asked to move in the field to verify the identities of the artisans. Almost everyone found that many Khadi institutions used to claim subsidy even for non-existing artisans, thereby usurping subsidy meant for artisans in the last 10-odd years. This meticulous exercise has weeded out almost 7 lakh fake artisans as the number of registered number of artisans was found to be 4.6 lakh instead of inflated 11.6 lakh; this has thereby reduced the subsidy burden on the government by around Rs. 153 crores. Not only that, the number of Khadi institutions who claimed subsidy has also come down to 1,423 in current FY till 13th March 2018 from 1,759 in FY 2016-17 and 1,918 in 2015-16.”

The Chairman added that KVIC has a zero-tolerance policy towards corruption and transparency in all transactions is its top priority. “A need was, therefore, felt by us to cleanse the data and remove numbers of the non-existing artisans, so that the MDA could be paid directly to the artisans, in their accounts. We introduced online Direct Benefit Transfer (DBT) system through Aadhar-seeded bank accounts in January 2016, which resulted in flushing out ‘ghost’ artisans, who were usurping government subsidy,” he said.

The subsidy paid by KVIC to Khadi Institutions


No. of Khadi Institutions who claimed subsidy (MDA)

Total MDA claimed and released




316 crore



171 crore



163 crore

*Figures till March 13, 2018

MDA is calculated as 30 percent of the prime cost of production. Out of this eligible amount, 40 percent is paid to the Khadi-producing institutions, 40 percent to the artisans and remaining 20 percent to those same institutions for giving discounts to customers.

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