The debate on cash transfers has been a dialogue of the deaf. But the Pradhan Mantri Jan Dhan Yojana is ensuring that they will spread. How they are extended will be crucial. If properly designed, they could empower women and improve their lives in many ways.
The arguments against cash transfers are emotionally appealing, and the one most often repeated is that women will become disempowered as men seize the cash to use to increase their consumption of liquor. Women, the arguments go, prefer food or labour or other concrete benefits whereas men prefer cash. However, there is no evidence to support this and unlike many critics and advocates, we draw conclusions from three pilots, in which thousands of men, women and children received a modest, unconditional monthly direct transfer—a basic income. Their subsequent experience was monitored through surveys that compared their experience with a control group of thousands who did not receive the payments. The methodology and results are described in a recent book.
We started with a small study in Delhi, where rations for poor families was substituted by cash in bank accounts in the name of the eldest woman. We found that the women managed the cash well and could choose whatever their family needed. A group of women would get together and buy food in the wholesale markets; not only did they buy better grain but they added pulses, milk and eggs. Their nutrition improved.
The next two experiments were in rural Madhya Pradesh and involved over 11,000 individuals. Both women and men received a basic income individually directly in their accounts. The children’s cash was paid to their mothers. There were fundamental features of this pilot that provided women with potential advantages. The payment of money was individual, giving women an identity that they may not have had before. The amount was equal, the same for men and women, which made it automatically progressive in gender terms, since the average income or earnings of women was lower than for men, so that it was worth more for women. Finally, the basic income was unconditional. It is insufficiently appreciated that in practice conditional schemes are inequitable as far as women are concerned, since almost invariably they make behavioural demands on women that are not made on men.
The results should guide policymakers. First, by the end of the experiment many more women reported a preference for cash rather than subsidised food and kerosene of equivalent value, as did a majority of men. And at the end of the 18 months in which the transfers were paid, a majority of men and women reported that women had benefited even more than men.
Those were subjective views. The hard data showed why they made sense. The transfers had four types of effect, which taken together show why a basic income could be transformative.
First, there were welfare effects. The nutrition, health and schooling of girls improved more than the equivalent of boys of similar age and social background, although boys also gained. The nutrition effect was greatest for girls aged from two to five years. The effects for schooling were greatest for teenage girls, whose registration and attendance in secondary school rose significantly. The welfare effects fed through to women, particularly elderly women and disabled women, who gained a stronger bargaining position for access to healthcare.
The second effect can be described as equity. Not only did women benefit more in welfare, so redressing deeply-ingrained inequities, but women and men in lower-caste and tribal households tended to gain most, with many families being released from exploitative debt.
Third, cash transfers in the form of a basic income have positive economic growth effects. They should not be classified as just welfare spending, but as social investment. The basic income led to more work and labour, and to a diversification of production, with a big increase in own-account activities, especially farming, livestock and small businesses. And women were able to switch time to economic activity, through acquisition of small equipment and materials. Situations in which women engaged in multiple activities grew, not only raising household earnings but giving more economic security, since if one activity had a setback they could rely on others.
Highlighting the need to focus on backward areas, in the tribal village covered by the pilots, 30% of women who received the basic income switched from labour to own account work like farming and livestock, and 73% reduced their debt burdens.
For us, a fourth effect is as important for building a robust, socially healthy society. This is the emancipation effect.
There is much discussion of women’s empowerment. No single policy can achieve that by itself. However, the evidence from the pilots showed that an unconditional basic income substantially helped women gain a voice and strength in their relationships, inside the family and in the wider community. Many reported that the individual payments enabled them to participate more in household spending decisions. Over 54% in villages where the basic income was paid reported that household income was shared equally; only 39% reported that in villages where it was not paid.
In our experiments, the Self Employed Women’s Association (SEWA) was active in some of the villages, not others. Although empowerment effects were strong in all the villages, SEWA was able to advise and support women as they learned to handle money and bank accounts, so that they could better benefit themselves, their children and their community.
In general, having their own cash gave women more confidence. Several examples may highlight this. Cash transfers cannot eliminate all social problems. Alcoholic men will not suddenly be transformed; that requires other measures.
But over the 18 months, there was no increase in alcohol or tobacco consumption. When asked why, many women attributed that to the fact that families were investing more in productive assets and raw materials, so that the men were working more, having less time to sit around and drink! At the same time, women became more assertive, and it was a common sight to see women who previously had rarely left their homes, walking to the banks and discussing their accounts with bank officers.
In sum, if policymakers can only trust ordinary people, direct, unconditional cash transfers could help transform the lives of women for the better.
Jhabvala and Standing are co-authors, with Sarath Davala and Soumya Kapoor, of Basic Income: A Transformative Policy for India