Direct cash transfers gained attention after the Congress party’s “election guarantees.” Since then, other political parties and governments have adopted similar schemes to secure voter support. These transfers have become a key electoral strategy across India.

Case Studies of Cash Transfer Schemes

• Maharashtra and Madhya Pradesh: In Maharashtra and Madhya Pradesh the ‘Ladki Bahin’ and ‘Ladli Behna’ schemes respectively have been credited with helping the ruling fronts retain power.
• Tamil Nadu’s Approach: In Tamil Nadu, the government introduced the ‘Kalaignar Magalir Urimai Thogai’ scheme to extend its reach beyond traditional supporters, using cash transfers to strengthen political allegiance.
• AAP’s Delhi Initiative: AAP’s latest proposal, the ‘Mukhyamantri Mahila Samman Yojana’, promises ₹2,100 a month to women, aiming for cementing the party’s populist approach.

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Benefits of Direct Cash Transfers for Women

• Direct cash transfers, particularly for women from economically disadvantaged backgrounds, offer certain advantages.
• These transfers serve as a form of recompense for the unpaid labor women typically provide within the family structure.
• Despite the relatively modest amounts, such cash transfers enable women to use the money flexibly for essential needs or savings. In a predominantly patriarchal society, this financial independence provides women with a level of autonomy that they would not otherwise have. 
• The dignity and respect that comes from direct financial support is significant, particularly for women who are generally excluded from formal employment.
• Direct cash transfers reduce the likelihood of corruption and leakage, ensuring more efficient delivery of benefits to eligible beneficiaries.

Limitations of Cash Transfers

While these cash transfer schemes may provide immediate relief, they are not a substitute for comprehensive welfare policies.

• Forgoing Structural Issues: Cash transfers cannot address the deeper structural issues, such as the need for sustainable job creation and economic diversification, which are essential for long-term development.
• Shortcut to Win Election: These schemes can be viewed as shortcuts to win elections, reflecting a failure of the government to address underlying issues effectively and deliver long-term solutions.
• Maharashtra’s Economic Stagnation: Despite being one of India’s most industrialized and urbanized states, Maharashtra has experienced stagnation in both economic growth and employment generation in recent years.
• Madhya Pradesh’s Economic Challenges: Madhya Pradesh, one of relatively poorer states in India, faces its own set of challenges, including limited employment options and a lack of economic diversification.
• Drawback of Democracy: People often favor short-term welfare schemes, such as direct cash transfers, rather than supporting policies that address long-term development and structural reforms.
• Lack of Accountability: Such schemes undermine accountability, as they allow governments to focus on short-term gains rather than being evaluated on their overall performance and achievements over a five-year term.

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Conclusion

Sustainable economic growth, employment generation, and social welfare policies are necessary to address the deeper issues of inequality and poverty. Cash transfers should complement, not replace, efforts to create an inclusive, diversified, and sustainable economy.

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