Open Forum

New Delhi, 19 December 2012

Cash To Vote Transfer

SOCIAL POLICY, POLITICAL INTENT

Dr. S. Saraswathi  

(Former Director, ICSSR, New Delhi)

The cat is out of the bag – officially. Congress General Secretary Rahul Gandhi has unwittingly proved critics and skeptics right about the real intention behind the Congress’ much touted direct cash transfer scheme. Last week, while addressing the party chiefs of 51 districts, he couldn’t have been more candid  when he stated that ‘if we get this programme right, we will win not just the 2014 elections, but also the one after it. 

Thus “Aapka paisa aapka hath” (your money in your hands) – a catchy slogan indeed. This is the quintessence of the Direct Cash Transfer Scheme (DCTS) in the words of Rural Development Minister Jairam Ramesh. The expression is attractive and can thrill the aam aadmi. Finance Minister P Chidambaram claims that the scheme is a “pioneering and path-breaking reform”, and a “game changer”. This assertion is bound to raise the question “how?”

Meanwhile, an illusion is created that a short-cut to end poverty has been discovered at last.

With elections to Parliament coming closer and closer, political parties have been vying with one another to woo the voters. The ruling party is at great advantage. Suddenly getting into pro-active mood, it can bring policies and programmes and start implementing them also. The appeal is for whole groups and categories of people who form vote banks in the election vocabulary.  This can facilitate less strenuous and more effective propaganda.

Most critics are inclined to link DCTS mainly with electoral politics. Such a link can be discerned in whatever any party does or says or refrains from doing or saying. For, we have grown as a highly politicized society. Anything anywhere and anybody at any time seems to be part of a political environment acting and reacting with political motivations. But, this is just one aspect of this “path-breaking” scheme not reform as averred.

Another and more important aspect of the cash transfer is its effectiveness as a social policy.  It is a scheme aimed at alleviation of poverty. It substitutes cash transfer directly to the eligible consumers in the place of subsidized products and services. Eligible customers are expected to use the cash to buy the products and services covered under the scheme for market rates.

This policy is scheduled to be implemented in about 51 districts in 15 states from 1^st January 2013.  The plan is to cover the entire country by the end of 2013. About 42 welfare schemes presently administered by various Central ministries/departments have been identified to be brought under the scheme. Scholarships, old age pensions, health care programmes, maternal and child welfare schemes, and National Rural Employment Guarantee Scheme are considered suitable for transfer to cash subsidy.

Gradually, the cash transfer will be extended to subsidized products such as fertilizers and medicines, and then to essential goods distributed through the Public Distribution System (PDS) of the State Governments.

DCTS is certainly not an Indian innovation, but a borrowed one from other countries where it works well. Details of the scheme, however, vary substantially. In most countries, it is not DCTS, but CCT – Conditional Cash Transfer. This scheme aims at reducing poverty, but conditions are attached to cash transfer. The eligible recipients do not get cash unless they fulfil certain conditions that ensure expenditure of the cash for the earmarked purpose.

The conditions so imposed are scheme-related like enrolling children in schools and getting regular medical check-up. This has the effect of transforming the scheme as a strategy for developing human capital, which is very necessary for progress from one generation to the next.

The impact of social welfare schemes, especially poverty alleviation programmes should not end with individuals. They aim at reducing individual poverty and thereby reducing the number of poor people in a country. This is possible only through strengthening the ability of the people to improve their standard of living by themselves. The schemes should have such inbuilt provisions or conditions that no recipient would be passing on his dependence on doles for essential goods to his progeny as a hereditary right.

CCT is in operation in many Asian and Latin American countries. The focus may vary.  Indonesia focuses on reducing infant and child mortality and providing universal basic education. Mexico and the Philippines centre attention on education, health, and nutrition.  Brazil covers three categories of families – extremely poor, families with children under 17 years of age, and families with lactating women.

In India, DCTS targets people below poverty line – a controversial category. Cash transfer directly to the household, it is presumed, will eliminate middle men, promote speedy assistance, and will check corruption. We cannot prophesy whether these expectations would be fulfilled.  Nor can we refrain from giving a warning based on our experience. We must realize that cash is cash that can be put to any use. Any individual has his/her own priority in spending money.

There are a number of cases well known to green ration card holders (signifying BPL family), where flood or cyclone relief money is used to buy gold rings. Small-scale jewel shops and pawn brokers have a good opportunity doing business with the relief money given to flood victims, who include knowingly or unknowingly a number of non-victims.

The victims are familiar with living in poverty, but are attached to gold if they can get. If these types of people are to be offered cash in the place of products on a regular basis, human development index is not likely to improve. Even the regular PDS, apart from bogus cards and pilferage of products, is misused by many card holders who sell the grain in the open market and take cash in exchange. Mortgage of ration cards is also in vogue to raise loans. It means that ration cards have monetary value.

Cash in poor households is mostly handled by the male head of the family. Cash given in lieu of products may find its way to wine shops is a general comment supported by commonplace observation in many places whatever studies around Delhi may show.

Therefore, we will require a strong and nationwide machinery to oversee that cash subsidy is used for the intended purpose. In a country rampant with corruption, there is need for establishing several layers of supervisory machinery.

Social policy in India has always been rather haphazard lacking definite vision and direction.  The concept of guaranteeing a certain minimum standard of living on the part of policy makers, and a desire to improve their lifestyle on the part of the poor households are essential for the success of poverty alleviation programmes.

When the ground is not properly prepared, the cash transfer scheme may turn out to be the starting point of ending the era of subsidies and familiarizing poor households to adjust to market driven social order. ---INFA

(Copyright, India News and Feature Alliance)