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Resource centre on India's rural distress
 
 

Direct cash transfers will give spending boost to economy. Crisil explains how -Seetha

-FirstPost.com

So we're all familiar with the argument that direct cash transfers (also known as direct benefit transfer or DBT) is a more efficient and cheaper way of delivering subsidies to the poor. Did you also know that this could also give a spending push to the economy?

That's what a Crisil Insight report, Cascading cash, catalysing consumption, says, pointing out that an unconditional cash transfer will raise the discretionary spend of poor households.

The report puts a number to the amount of cash transfer (Rs 5,800 a year for a family of five) as well as the savings to the exchequer in 2015-16 (20 percent of the current food subsidy bill or Rs 25,000 crore). The cash transfer figure is the difference between the market price has been arrived at and PDS (public distribution system) price for wheat and rice of comparable quality. Using the 2014-15 mandi prices for these food grains, the study has forecast the 2015-16 prices using the same wholesale price inflation rate in them as in 2014-15.

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