10/23/2016

CashtransfersgaingloballyLivemint

Cashtransfersgainglobally
livemint.com/Opinion/DYA0Mv82re761PPL8rSk8H/Cashtransfersgainglobally.html

7/14/2015

LastweekthegovernmentschiefeconomicadvisorArvindSubramaniandescribedthedirectbenefittransfer
schemeasagamechanger.ThePahalscheme,underwhichcookinggasconsumersreceivesubsidyintheir
bankaccounts,isoneofthewaysthegovernmentistryingtoimprovetheefficiencyofitswelfareprogrammes
usingthesocalledtheJAMtrinity(JanDhan,Aadharandmobilephones).
SuchcashtransferschemesreceivealegupfromarecentWorldBankstudywhichsaysthatsuchprogrammes
areamoreefficientwayofprovidingsocialsafetyincomparisontoothermethods.
Acrosstheworld,theshareofcashtransfers,bothunconditionalandconditional,haveincreased.Whilethe
shareofsuchprogrammesincreaseswiththeincomelevelofcountries,theWorldBankhasalsohighlightedthe
rapidimprovementinthenumberofAfricancountrieswithunconditionalcashtransfers,whichdoubledfrom20
to40between2010and2014.Thenumberofcountriesprovidingconditionalcashtransfersincreasedto64
fromapaltrytwobetween1998and2014.
Thisincreaseisnotwithoutreason.Thereisemergingevidencefromimpactassessmentstudiespointingthat
cashtransfershaveapositiveandsignificantimpactonhealthandeducationindicators.Conditionalcash
transfersseemtoworkparticularlywellsincetheyensurethatthepoorestsubsetsofthepopulationreceivea
relativelygreatershareintotaltransfers.
AccordingtoWorldBankdata,inconditionaltransfers,thepoorest20%ofthepopulationgetaround40%ofthe
benefits.Thiscompareswellwithschemessuchasunconditionalcashtransfers,socialpensionsandpublic
workswherethepoorestonefifthreceivesonly25%ofthebenefits.
Thatdoesntmeanthatallconditionalcashtransfersareequallywelltargeted.Significantvariationsintargeting
efficiencyexistacrossnations.Highincomenationstypicallydobetter.Moreover,lowincomecountriesoftendo
nottransferenoughcashtocovertheneedsofthepoorpopulation.
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10/23/2016

CashtransfersgaingloballyLivemint

TheWorldBanksthumbsuptocashtransfersislikelytoboostthecallsforroutingofallsubsidiesthroughthe
cashtransferrouteinIndia.
Buttwopointsneedtobekeptinmind.
One,windinguporreducingfoodprocurementtomakewayfordirectcashtransferstoprovidefoodsecurity
canhavealargescalerepercussiononthefoodeconomy.
Two,thereisenoughevidenceoninadequacyofcashtransferstocoverconsumptionneedsinseveralpoor
countries.Suchtransferswouldespeciallybeinsufficientiftheydonotmatchhighinflationtypicalinsuch
countries.
RoshanKishore

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