Cash Trasfers can help make India less unequal, but are not a magic bullet.

Amartya Sen

The Union Governtment has launched the Direct Benifits Transfer(DBT) programme to give benifits like scholorship, pensions, NREGA wages etc directly to the bank or post office accounts of the benificiaries. There are also talks of direct transfer of subsidies for food, fertilizer and kerosene at a later stage.

Cash transfer can be a good way of helping the poor in many circumstances. Indeed many schemes which are not Direct 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 poor people in Rural India.

Cash is easy to handle and can be, in many cases, easily monitored.

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.

Ther is also another issue- that of the distributional effects of different kinds of benefits within the family. 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 "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 the undernourishment and deprivatiuon of young girls.

Further, even if it is made sure that cash transfer will work in 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.

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.

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.


Courtesy: THE HINDU