Subject: GS 3: Environment
Context: A research paper by a member of the Economic Advisory Council to the Prime Minister (EAC-PM) recommended the continuation and periodic revision of women-centric unconditional cash transfer schemes, based on an analysis of Maharashtra’s Mukhyamantri Majhi Ladki Bahin Yojana and Odisha’s Subhadra Yojana.
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Key Findings of the Study
- Higher Household Expenditure: The study found that the Mukhyamantri Majhi Ladki Bahin Yojana in Maharashtra increased beneficiaries’ expenditure by 46% (₹1,349), while Odisha’s Subhadra Yojana increased expenditure by 28% (₹1,920).
- The increase in expenditure was largely directed towards healthcare, education, and lifestyle-related needs, indicating welfare-enhancing consumption.
- Improved Savings and Financial Security: Beneficiaries in Maharashtra witnessed an 84% increase in month-end account balances (around ₹6,884), while those in Odisha recorded a 45% increase (around ₹6,887).
- The study observed that older women tended to save more, whereas women with lower educational attainment spent relatively more on education, reflecting differences in household priorities.
- Positive Household Spillover Effects: The schemes generated positive financial spillovers for other family members.
- In Odisha, a 10% increase in women’s account balances was associated with a 1.9% decline in relatives’ expenditure.
- In Maharashtra, higher balances were associated with a 23% increase in relatives’ savings and a 49% reduction in their expenditure, indicating improved household financial resilience.
- Boost to Digital Financial Inclusion: The study noted a significant increase in the use of the Unified Payments Interface (UPI) after beneficiaries received cash transfers, particularly in Maharashtra.
- It highlighted that Direct Benefit Transfer (DBT) combined with digital payment systems has strengthened financial inclusion among women.
Recommendations
- The paper recommended that the schemes should continue and evolve into “cash-plus” models, combining cash transfers with:
- Digital literacy
- Skill and capacity-building programmes
- Self-Help Group (SHG) linkages
- It also recommended periodic revision of transfer amounts to account for inflation and changing household expenditure patterns.
About the Schemes
- Mukhyamantri Majhi Ladki Bahin Yojana (Maharashtra) (2024): A Direct Benefit Transfer (DBT) scheme providing ₹1,500 per month to eligible women aged 21–65 years.
- Aims to enhance financial security, improve nutrition, health, and family welfare, and promote women’s socio-economic empowerment.
- Subhadra Yojana (Odisha) (2024): A Direct Benefit Transfer (DBT) scheme providing ₹10,000 annually to eligible women aged 21–60 years in two equal installments.
- Seeks to strengthen women’s economic empowerment, promote financial inclusion and social security, and improve their participation in household decision-making.
About Economic Advisory Council to the Prime Minister (EAC-PM)
- Established: 2017 as an independent advisory body to the Prime Minister on economic and related policy issues.
- Nature: A non-constitutional and non-statutory body functioning under the Chairmanship of the Prime Minister’s Economic Advisory Council.
- Functions: Provides independent economic analysis, advises on macroeconomic, fiscal, trade, employment, and social sector policies, and undertakes research on key developmental issues.
- Role: Evaluates the impact of government policies, prepares analytical reports, and recommends measures for sustainable and inclusive economic growth.
- Composition: Headed by a Chairperson and comprises part-time and full-time members, supported by a dedicated secretariat.
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Significance of Women-Centric Cash Transfer Schemes
- Women Empowerment: Enhances women’s financial autonomy, decision-making power, and control over household resources.
- Improved Human Development: Encourages greater expenditure on education, healthcare, nutrition, and children’s welfare, leading to long-term improvements in human capital.
- Poverty Reduction and Social Protection: Acts as an important social safety net, helping vulnerable households cope with income shocks, inflation, and emergencies.
- Financial Inclusion: Promotes the use of bank accounts, Direct Benefit Transfer (DBT), and digital payment platforms such as UPI, thereby expanding formal financial inclusion.
- Economic Multiplier Effects: Increased household consumption stimulates local demand, while improved savings strengthen household financial resilience.
Associated Challenges
- Fiscal Sustainability: Large-scale unconditional cash transfer schemes impose a significant burden on State finances, potentially increasing public debt.
- Crowding Out Productive Expenditure: Excessive expenditure on welfare transfers may reduce fiscal space for investments in education, healthcare, infrastructure, and capital formation.
- Targeting and Leakages: Inclusion and exclusion errors may prevent benefits from reaching the most deserving beneficiaries.
- Dependency Concerns: Long-term dependence on unconditional transfers may discourage labour force participation if not complemented by livelihood opportunities.
- Inflationary Pressures: Rising inflation can reduce the real value of transfers, making periodic revision necessary.
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Challenges Highlighted by RBI and Economic Survey
- Reserve Bank of India (RBI): The RBI has cautioned that a rising share of expenditure on freebies and unconditional cash transfers can increase State debt burdens.
- It may also reduce fiscal space for infrastructure creation, capital expenditure, and long-term growth-oriented investments.
- Economic Survey 2025–26: The Survey observed that excessive fiscal populism and poorly targeted unconditional cash transfer schemes can crowd out growth-enhancing public expenditure.
- It emphasised that welfare spending should be accompanied by prudent fiscal management, targeted delivery, and sustainable revenue mobilisation to preserve fiscal credibility and macroeconomic stability.
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Government Initiatives Supporting Women
- Deendayal Antyodaya Yojana–National Rural Livelihoods Mission (DAY-NRLM) (2015): Promotes women’s Self-Help Groups (SHGs), entrepreneurship, skill development, financial inclusion, and sustainable livelihood generation.
- Mission Shakti (2022): Provides an integrated framework for women’s safety, protection, empowerment, and economic participation through its Sambal and Samarthya components.
- Lakhpati Didi Initiative (2023): Aims to enable women associated with Self-Help Groups (SHGs) to earn an annual income of ₹1 lakh or more through skill development, entrepreneurship, and sustainable livelihoods.
Way Forward
- Adopt Cash-Plus Models: Combine cash transfers with skill development, financial literacy, digital literacy, and livelihood support to promote sustainable economic empowerment.
- Periodic Revision of Benefits: Regularly revise transfer amounts to account for inflation, changing household needs, and regional cost-of-living differences.
- Improve Targeting: Use Aadhaar-enabled DBT, SECC databases, and real-time beneficiary verification to minimise leakages and improve efficiency.
- Balance Welfare and Fiscal Prudence: Ensure that social protection programmes are complemented by adequate investment in education, healthcare, infrastructure, and employment generation.
- Strengthen Monitoring and Evaluation: Conduct periodic impact assessments to evaluate outcomes related to poverty reduction, women’s empowerment, financial inclusion, and human development.
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Conclusion
The findings of the EAC-PM study reinforce that well-designed, targeted, and digitally delivered cash transfer programmes can significantly improve women’s economic security, household welfare, and financial inclusion. However, sustaining these schemes requires balancing social welfare objectives with fiscal sustainability, while integrating cash transfers with capacity-building and livelihood interventions to create long-term developmental outcomes.
8 Jul 2026
