Column : Making cash transfers work

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Sarath Davala:  Jan 14 2013, 00:35 IST
In this month, the government of India plans to roll out its cash transfers scheme in some 51 pilot districts. The ruling party expects this scheme to be a game-changer in the next general elections. The government also expects big savings to the exchequer in terms of cutting out the operational costs and plugging the leakages in social spending. The announcement of the scheme and the implied policy drift has met with a great deal of criticism and opposition, the latest one coming from a group of prominent social activists and academics who have issued a statement strongly opposing a wholesale shift of the modus of social spending to cash transfers.

Ironically, what is common between the government’s script of the cash transfer scheme and its opponents is their mistrust of the poor. Both seem to believe that the poor will drink away their cash or spend it irresponsibly. The government displays its mistrust by imposing conditionalities and through them engineer the so-called responsible behaviour, while the opponents do so by upholding ‘in-kind transfers’ such as grain or bricks as opposed to cash.

What is wrong with the conditionalities that the government seeks to impose? They immediately bring into the picture a bureaucratic procedure to approve and monitor compliance, which in turn paves the way for monitors or certifiers at the muscle-end of the bureaucracy. This then produces a system of patronage at the street-level through the political party channels. This is a recipe for erosion of the welfare benefit or subsidy

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