Conditional Cash Transfers in India
Conditional cash transfers [“CCT”] are loosely defined as welfare-oriented, state-sponsored programs that give indigent families cash conditional on specific, verifiable actions. They are usually directed towards gender empowerment and the nutritional and educational needs of children. CCTs are an integral part of the World Bank’s ‘safety net’ policy, and have allegedly enjoyed considerable success in several countries. Over the past decade, the Indian state has begun to use CCTs in many sectors as a part of its wealth-redistribution, poverty reduction programs. For example, in March 2008, “Dhanalakshmi” – a CCT scheme for female children for insurance cover – was introduced in Andhra Pradesh, Uttar Pradesh, Bihar, Orissa, Jharkhand, Chhattisgarh and Punjab. Similarly, the Delhi and Haryana state governments recently launched the ‘ladli’ scheme to benefit the girl child. Recently, there have been proposals to increase the number and profile of CCT programs in India and extend its benefits to all vulnerable ad marginalised groups in India. In this blog post, I try to make sense of the scope and applicability of CCT programs in India. More simply put, I try to answer the following question – is it a good idea for the Indian state to improve welfare by distributing cash conditional on the actions and changed behavioural patterns of intended beneficiaries?
At the outset, I admit that I have a very limited training in economics. However, some advantages of CCTs are obvious. Giving indigent families cash conditional on specified actions provides a strong incentive to change behaviour. It can be argued that CCTs might be more successful than past governmental incentive systems – like the mid-day meal scheme to incentivize education – as it gets to the core of the problem. Children aren’t sent to school because they work to make money; mothers don’t access pre and post natal care because they can’t afford it. Similarly, it appears as though CCTs allow the state to precisely target the group/ policy it wants to. If successful, CCTs can ensure something as specific as better immunisation records for dalit children in Andhra Pradesh. People have also argued that the benefits of CCTs have a better chance of reaching intended beneficiaries than other government welfare schemes like subsidies. And finally, there is the most obvious reason: as CCTs are a part of the World Bank’s scheme of things, there is a greater chance of attracting aid for CCT-based human development projects.
However, this is only one side of the story, and some disadvantages of CCT-based programs are equally obvious in the Indian context.
First, and most patently, there is the problem of corruption. An advantage of in-kind benefits (such as food grains and mid-day meals) is that the chance of the benefit getting siphoned off to corrupt officers is lower than if the benefit in question is cash. Second, CCTs require a lot of infrastructure to be successful. Beneficiaries need to be documented, correctly identified, need to have bank accounts and easily accessible biometric data. Much of this is unavailable in India. Third, the ultimate success of CCTs depends on the quality of service providers available. If cash transfers are made conditional on children going to bad schools or visiting bad hospitals, the CCT program would have failed. Sadly, rural education and health care in India is far from adequate. Four, monitoring and evaluation is crucial to the success of CCT programs. There is virtually no effort in this area in the Indian context to my knowledge. If anyone reading this piece has information on the monitoring and evaluation of social welfare programs in India, I’d be grateful if you brought it to my notice. Five, monetary incentives will not help to alleviate all the problems faced by marginalised communities in India. Caste-based inequality and skewed gender ratios, for example, aren’t sourced in monetary considerations as much as years of entrenched prejudice and discrimination. Therefore, proving cash-based incentives to remedy these problems may not meet with much success.
My intention in this post is not to be unduly critical. CCTs may well represent a novel and useful method to ensure social welfare and protect the interests of minority groups in India. However, it is important to pursue such programs with caution and only after the pre-requisites for success are in place.