July 18, 2024
📰 FEATURE STORY
Can cash transfers help alleviate women’s poverty?
Most countries struggle with the economic and financial aspects of gender justice and equality. India is no exception. Women’s participation in the labour force and their financial inclusion are crucial to economic advancement, any way you look at it.
In India, one of the methods to tackle these issues is handing out cash to women. Ahead of the upcoming Budget, the government is mulling a cash transfer scheme for poor urban women. In the past, several states have had their own such schemes. Does this policy actually work on the ground and produce results, or is it merely a vote-getting tool?
Context
Research indicates that financial inclusion and paid work positively impacts women’s control over household resources. Data has shown that women and poor people are more likely to live far from a bank branch, lack proof of identity or a mobile phone, and need support to open and use a bank account.
Financial inclusion has been recognised as a driver of economic growth and poverty alleviation. It’s an important development indicator and identified as an enabler for at least 8 of the 17 Sustainable Development Goals (SDGs). It’s proven that access to bank accounts, loans, insurance, and other financial services directly improves education, employment, and health outcomes. But all this is useless if the target recipients don’t get money.
In 2014, India launched the Pradhan Mantri Jan Dhan Yojana (PMJDY) to promote financial inclusion in every household. Since then, according to the Finance Ministry, over 460 million bank accounts have been opened. 67% are in rural and semi-urban areas, and 56% are owned by women.
Several states have had their own trysts with unconditional cash transfers to women. In 2021, West Bengal launched the Lakshmi Bhandar scheme that provided a monthly allowance of ₹500 to women in the general category and ₹1,000 to SC and ST women. Madhya Pradesh introduced the Ladli Behna Yojana in 2023 with a monthly transfer of ₹1,250 to female beneficiaries. The Gruha Lakshmi scheme in Karnataka paid women heads of households ₹2,000 per month.
Parties like the DMK in Tamil Nadu, the AAP in New Delhi, and the Congress have all, at some point in time, announced similar cash transfer schemes. In some cases, these schemes are usually supplemented with free power and water connections.
Since the pandemic, these types of cash transfers, which tap into the idea of a Universal Basic Income (UBI), have become a popular policy plank. It’s partly because parties have realised the importance of women as an electoral group. So, do these cash transfer policies provide any material improvement?
VIEW: They work
These cash transfer schemes aren’t cheap. States need to have adequate financial resources to ensure they can keep giving people money every month. While they’re fiscally challenging, they have a limited impact on the overall fiscal balances. The actual deficits for states are generally below the budgeted calculations. Borrowings by states are capped at 3% of the Gross State Domestic Product (GSDP). These often substitute other expenditures, which helps limit the overall fiscal impact.
Let’s take Karnataka’s Gruha Lakshmi scheme. There was a lot of criticism of this scheme, saying it would bankrupt the state. The AAP’s example in New Delhi showed that, despite the introduction of welfare measures, there was a reduction in the percentage of public debt to GSDP from 2013-14 to 2017-18. One study showed that Karnataka had the highest rate of female labour participation. A transfer of ₹2,000 didn’t impact their incentive to work.
A 2019 Yale University study showed that poor women in socially restrictive households in India were more likely to take up jobs if their MGNREGS wages were deposited into their bank accounts. Many of the cash transfer schemes are designed so that women directly get the money into their Aadhaar-linked bank accounts. If women are taught to operate these accounts effectively, they’ll have more control over their finances. These can also help dilute common patriarchal norms.
COUNTERVIEW: Doesn’t do much
One of the most common criticisms of cash transfer schemes is that it actually reinforces patriarchal norms. Many of these schemes that target health and education outcomes are designed by keeping women’s reproductive roles at their core, and other aspects are considered secondary. When social policy is focused on family relationships over individual rights and citizenship, maternalistic policies usually see women just as mothers.
A glance at many cash transfer schemes shows that they’re usually announced during election campaigns. Parties have realised the importance of women voters and began to announce cash doles. Ultimately, these schemes don’t offer a long-term financial incentive for women. Cash transfers in the short term run the risk of abuse or misuse in a patriarchal setup. One possible alternative solution is providing social security benefits to homemakers, which many have argued is an invisible service yet is considered important to nation-building.
Some surveys and studies have shown that these cash transfer schemes, especially from the Centre, will exclude many women. From a financial and fiscal standpoint, it’s very expensive. The balance sheets of several states aren’t healthy. Cash transfers could result in two things – expenditure substitution from one scheme to this or additional borrowings. Both aren’t ideal.
Reference Links:
- Union Budget 2024 | Centre mulls cash transfer scheme for poor urban women – Deccan Herald
- Financial Inclusion of Women: Current Evidence from India – ORF
- 16% of Indian Women Benefit from Income Transfer Schemes, Study Finds – Outlook
- Cash transfer schemes in India: Bandwagon politics or smart economics? – Newslaundry
- Gruha Lakshmi: Despite Flak, Karnataka Cash Transfer Scheme is a Powerful Tool to Empower Women – The Wire
- Women More Likely To Work If They Can Control Their Earnings: Study – IDR
- Naari Shakti is more than cash transfers – Deccan Herald
- The problem with conditional cash transfers – IDR
- Yale study finds a majority of India’s poor women likely to miss Centre’s cash transfers – National Herald
What is your opinion on this?
(Only subscribers can participate in polls)
a) Cash transfers can help alleviate women’s poverty.
b) Cash transfers can’t help alleviate women’s poverty.
🕵️ BEYOND ECHO CHAMBERS
For the Right:
Revisit economic policy to boost growth
For the Left:
Distorting History, Destroying Harmony: The Dravidian Model