Hindu Editorial Analysis : 4-January-2025
Cash transfer schemes have gained significant attention in India as a means to tackle socio-economic issues like poverty, unemployment, and agrarian distress. While these schemes are popular for providing immediate financial relief, there is growing concern about their political motivations and long-term effectiveness in addressing the root causes of these problems.
The Importance of Cash Transfers in India
Financial Support for the Underprivileged:
Cash transfers are designed to provide direct financial aid to economically disadvantaged individuals, bypassing intermediaries and ensuring the benefits reach those who need them the most.
- The Direct Benefit Transfer (DBT) program, for example, covers 320 schemes across 54 ministries, transferring funds amounting to ₹40,91,115 crore in the financial year 2024-25.
Economic Benefits:
- Stimulating Local Economies: By increasing the purchasing power of the poor, cash transfers can drive demand for local goods and services, helping businesses and local economies thrive.
- Ease of Implementation: With the rise of financial inclusion, these schemes are easy to implement, offering tangible benefits directly to voters.
- Empowerment and Inclusion: Programs like the Mahila Samman Yojna in Delhi promote women’s economic participation and empowerment, helping bridge gender gaps.
Flexibility and Transparency:
- Cash transfers are often preferred by beneficiaries due to their flexibility. People can use the money for any purpose, whether it’s education, healthcare, or daily expenses.
- These schemes reduce bureaucratic inefficiencies, ensuring that funds reach the right people without delays or corruption.
Major Cash Transfer Schemes
India has several key schemes under the DBT umbrella aimed at supporting various sections of society:
- Pradhan Mantri Kisan Samman Nidhi (PM-KISAN): Provides ₹6,000 annually to farmers.
- PM Jan Dhan Yojana (PMJDY): Ensures that every household has access to banking facilities.
- PAHAL: Aims to eliminate ghost beneficiaries by directly transferring subsidies to intended recipients.
- MGNREGA: Offers cash incentives for rural employment.
- Conditional Cash Transfer Schemes: These programs provide funds based on meeting specific conditions like ensuring children attend school.
State-Level Initiatives
Several states have also launched their own cash transfer schemes, such as:
- Maharashtra’s Mukhyamantri Majhi Ladki Bahin Yojana: Provides ₹1,500 per month to eligible women.
- Jharkhand’s Mukhyamantri Maiya Samman Yojana: Offers ₹1,000 per month to women in need.
These state schemes contribute to political mobilization and welfare, particularly during election seasons.
Challenges and Concerns
Despite their benefits, cash transfers face criticism for several reasons:
- Economic Burden: The large-scale implementation of these schemes can strain state finances, leading to potential deficits and reduced spending on essential services.
- Short-Term Focus: Cash transfers often offer temporary relief, but they fail to address deeper issues like lack of education, healthcare, and outdated farming techniques that contribute to poverty and unemployment.
- Political Tool: Political parties have increasingly used cash transfers to gain electoral advantage, with governments tailoring schemes to target specific voter groups.
Key Recommendations for Improvement
Experts argue that cash transfer schemes should be a supplement, not a replacement, for other forms of welfare:
- Enhancing Skill Development: Cash transfers should be paired with programs that empower the poor through skill development and sustainable livelihood opportunities.
- Focus on Nutritional Support: Cash transfers should ensure that money is used for essential needs like food, particularly for children and girls, addressing social biases.
- Building Stronger Institutions: Effective cash transfers, especially for farmers, require strong economic institutions like Farmer Producer Organizations, which can help the poor compete in the market.
Why In News
Cash transfers have become a popular tool for political parties in India, often touted as a quick solution to various socio-economic issues such as poverty, unemployment, and agrarian distress. However, there is growing concern that these schemes are increasingly being used as a political strategy, prioritizing short-term electoral gains over tackling the root causes of these systemic problems, such as inadequate education, poor healthcare, and outdated agricultural practices.
MCQs about Cash Transfer Schemes in India
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What is the primary goal of cash transfer schemes in India?
A. To increase government revenue
B. To provide direct financial assistance to the underprivileged
C. To reduce the number of political parties
D. To replace traditional welfare programs
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Which of the following is a benefit of cash transfers in India?
A. They encourage the establishment of new political parties
B. They stimulate local economies by increasing the purchasing power of the poor
C. They eliminate the need for government subsidies
D. They make agricultural practices more efficient
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Which of the following is a concern regarding cash transfer schemes in India?
A. They always lead to significant fiscal instability
B. They focus on short-term electoral gains rather than addressing long-term problems
C. They are only effective in rural areas
D. They are exclusively funded by foreign aid
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What is the role of programs like the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN)?
A. They aim to provide healthcare services to farmers
B. They provide direct income support to farmers through bank transfers
C. They offer agricultural training to farmers
D. They subsidize electricity bills for farmers
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