Despite DBT, CAG audits keep finding exclusion and inclusion errors in SC scholarship schemes. Examine the reasons and suggest reforms.

Direct Benefit Transfer (DBT) makes sure money reaches the bank account on the beneficiary list. It cannot make sure the list itself is right. The 2025 CAG audit of SC scholarships found that 40.75 lakh students were paid late, more than 3.5 lakh got nothing, and more than 6,000 non-SC students were paid [1]. These errors happen before and after the transfer, not during it.

Reasons for exclusion errors (eligible students left out)

• Order of funding: under the 2020 revamp's 60:40 pattern, the Centre releases its share only after the State pays its 40% [2]. If a State is short of money, the student gets neither share.
• Delays that keep coming back: payments were delayed by 1–6 years in the 2018 audit [3] and by up to 90 months in 2025 [1].
• Portal and planning gaps: in Kerala, 3,499 students were left out because 379 schools were not registered on the e-grantz portal. The State also did no survey of potential beneficiaries [4].

Reasons for inclusion errors (ineligible people paid)

• Weak checks before payment: States are supposed to check eligibility, caste and income on the portal [2]. Even so, more than 5,700 cases were paid without an income check [1].
• Claims driven by institutions: colleges report their own enrolment and fees. The 2018 audit found scholarships paid to ineligible students and overpayments [3].
• Unclear accountability: the Union says implementation is the States' job, while six Chief Secretaries did not appear before the PAC [1].

Reforms

• Check eligibility at the source: match caste and income certificates against State records before approval, and publish each State's rejection rates.
• Audit institutions: inspect colleges that show sudden jumps in SC enrolment.
• Fixed timetable for the State share: publish State release dates and attach penalties for delay.
• Secure accounts: pay only into Aadhaar-linked student accounts that have been verified in person.
• Close the accountability loop: require time-bound Action-Taken Reports to the PAC [1], plus social audits involving student bodies and the NCSC.

Exclusion errors come from money and paperwork arriving late. Inclusion errors come from weak eligibility checks. DBT alone fixes neither. Combining digital transfer with verified eligibility, predictable State funding and shared Union–State accountability would make PMS-SC work as a real tool for Article 46 and SDG 4.