‘Cash transfers can help make India less unequal, but are not a magic bullet’
The Union Government has launched the Direct Benefits Transfer (DBT) programme to give benefits like scholarships, pensions, NREGA wages, etc. directly to the bank or post office accounts of beneficiaries. There are also talks of direct transfer of subsidies for food, fertilizer and kerosene at a later stage. Will the scheme work?
Cash transfer can be a good way of helping the poor in many circumstances. Indeed, many schemes that are not directly cash transfer schemes also work mainly through cash transfer, such as the National Rural Employment Guarantee programme, which certainly has helped the poor through creating jobs and generating cash income for a great many poor people in rural India. Cash is easy to handle and can be, in many cases, easily monitored. It cannot be sensible to be generically against cash transfer schemes, in a country with a lot of poverty and a commitment to use public money to make the very poor a bit less poor.
However, the Direct Benefits Transfer (DBT) programme is a particular scheme of cash transfer, and we have to ask what it may be displacing and whether the losers will not be plunged into more poverty. It is not the modality of cash transfer that is the only issue, but also how much, and for whom, and also, instead of what. If, for example, it is instead of subsidised food, we have to make sure that the people who depend on cheaper food will have enough cash to buy the unsubsidised food.
The Essay on Conditional Cash Transfer
New York City’s Center for Economic opportunity led the United States in launching Opportunity New York City as an experimental and privately funded program to help families in six of the city’s highest-poverty communities break the cycle of intergenerational poverty (Riccio, 2010) . The ONYC study aimed to test the impact of the cash transfers on the health of the family, education of the ...
There is also another issue — that of the distributional effects of different kinds of benefits within the family. There is a good deal of empirical evidence to suggest that direct access to food tends to favour children rather than only the adults, and also girls rather than only the boys, working against biased social priorities, common in the subcontinent, favouring adults over children, and boys over girls, which is a long-standing problem in Indian society. If the cash transfer is not additional to food subsidies, and is given “instead of” food subsidies, it would be important to make sure that the money given would be used for nutritional purposes and, equally importantly, that it would be divided within the family in a way that addresses the manifest problems of undernourishment and deprivation of young girls.
Further, even if it is made sure that cash transfers will work in a way that meets these difficulties, there may still be a serious problem of transition, especially if there is a time lag in opening an account in a bank, or in a post office, to receive the cash transferred. If, meanwhile, the subsidised food disappears, the poor who fail to open an account adequately fast, for one reason or another, will lose doubly through not having the cash yet, and through the fact that others will have the cash to buy food which would keep the food prices high. The transition problem need not be impossible to handle, but attention will have to be paid to that, bearing in mind that many of the poorer Indians lead a life of hand-to-mouth existence, and any delay in the period of transition may plunge some people into extreme hardship. All this is in addition to the long-run problems of the modality of cash transfer, including distributional issues, as well as the adequacy of the amounts of cash transferred.
The Essay on Fast Food: Problem in America?
Imagine you’re at McDonald’s and you’re going in for that bite on your burger. First thing you think about is the tastiness of the burger and not exactly what you’re eating. Little do you know that you’re eating so much stuff that will actually take a toll on your body in the long run? Most Americans do not have this thought running through their minds because all they care about is the explosion ...
Cash transfer can be a very useful system to supplement other ways of making India a less unequal society, but it is not a magic bullet, and its pros and cons have to be assessed and scrutinised with an open mind.
