Unconditional Women Cash Transfer Programmes

Unconditional Women Cash Transfer Programmes

Context

The Economic Advisory Council to the Prime Minister (EAC-PM) released a working paper reviewing the impact and fiscal sustainability of Unconditional Women Cash Transfer Programmes in India.

About the News

Background:

• Unconditional Cash Transfers (UCTs) to women have become one of the fastest-growing state welfare schemes in India.
• Between FY23 and FY26, the number of states implementing UCTs increased more than five times.
• By FY26, over 15 states had launched these schemes, covering nearly 12 crore women with an annual cost of about ₹1.7 lakh crore.

Core Objectives:

• Direct Income Support: Provide direct financial assistance to women for better household welfare.
• Financial Inclusion: Encourage women to use bank accounts and formal financial services.
• Economic Equity: Reduce gender-based economic inequality and exclusion.

Core Benefits: Working Paper Highlights

• Higher & Better Spending: Maharashtra and Odisha recorded 46% and 28% higher expenditure, mainly on healthcare, education, and quality of life.
• Women-Focused Transfers: Direct transfers to women produced better savings and household welfare than gender-neutral cash transfers.
• Intergenerational Benefits: Women spend more on children's education, health, and nutrition.
• Greater Decision-Making Power: Direct income improves women's financial control and household bargaining power.

Key Challenges

• Rising Fiscal Debt: RBI projects total state debt at around 29.2% of GDP, with several states exceeding a 30% debt-to-GSDP ratio.
• Crowding Out Capital Spending: High welfare spending may reduce investment in infrastructure and other long-term assets.
• Dependency & Political Risks: Poorly designed schemes may encourage dependency and become political populist tools.

Way Forward

Policy Architecture:

• Periodic Revision: Regularly increase transfer amounts with inflation and improve beneficiary targeting.
• Cash-Plus Model: Combine cash transfers with financial literacy, skill training, and better healthcare access.

Operational Framework:

• Stronger Digital DBT: Expand Direct Benefit Transfer (DBT) through PM Jan Dhan Yojana to reduce leakages and administrative costs.
• Long-Term Integration: Make UCTs a permanent part of the social safety net instead of temporary political measures.

Global Best Practices

Conclusion

Unconditional cash transfers for women strengthen financial security, household welfare, and human capital. Their long-term success depends on fiscal discipline, continued capital investment, and a well-designed Cash-Plus approach.