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Resource centre on India's rural distress
 
 

Let The People Choose -Renana Jhabvala
-The Times of India

Everyone agrees that India needs to deliver social protection to the aam admi; the forthcoming Food Security Bill is one such attempt. Everyone also agrees that the government service delivery pipelines are riddled with leakages and largescale corruption. Direct cash transfers have been proposed as a way to remedy this defective system.

However, as could be expected, the debate has become polarised, with one side believing that cash transfers would solve all the problems of service delivery, and the other insisting that cash transfers would harm the interests of the poor and would signal government retreat from its responsibilities. Two features of the debate today are worth noting. First, it is being framed in an all or nothing fashion: as an option of either food or cash. Second, the voices of poor consumers themselves seem to be absent from the debate between advocacy groups.

Why not allow the beneficiary a choice between cash and food? A policy of choice allows a family to choose what it deems best for its circumstances and needs. Choice allows people to demonstrate that they don’t necessarily need the guidance of a paternalistic state. If India’s middle classes have benefited from the greater choices available to them as the result of liberalisation, why should poor households be deprived of greater choice in alternative forms of social protection?

It is not as if the main form of food security to the poor in India today – the public distribution system (PDS), where the central government subsidises grain, sugar and fuel for targeted poor families – is very effective. Despite the subsidies amounting to nearly Rs 60,000 crore per year, a performance evaluation of the PDS by the Planning Commission in 2005 showed that only about 32% of those subsidies actually reach the poor. The alternative method of cash transfers – wherein the subsidies would be deposited directly in the bank accounts of the targeted people, allowing them to buy their own food – could afford a greater measure of security.

The Delhi government along with the Self Employed Women’s Association, Delhi undertook a pilot study to examine the effect of such transfers on food security among the urban poor. The pilot was for one year in a poor area of west Delhi. Four hundred and fifty BPL cardholders in this area were asked whether they wished to participate in the study or not. Yeses and Nos were recorded, and of the ‘yeses’, 100 were randomly selected to receive cash transfers. The rest of the ‘yeses’ as well as the ‘nos’ were the control group.

The cash transfer families were not entitled to take anything from the ration shop during the pilot period. The cash transfer for each self-selected family was in the name of women only; an account was opened for this purpose in her name in the nearest bank and the transfer was paid every month into the account. Each family received Rs 1,000 per month, which was the value of the subsidy.

The results of the study showed a marked increase in the nutrition of families that received cash transfers as they were able to buy about 60% more non-vegetarian foods and pulses than those who were still on PDS, while the amount of grain and sugar consumed by both groups remained the same. We observed that many women pooled their resources to hire auto-rickshaws once a month and go to the wholesale market to buy grains of their choice at lower prices. They also said the quality of grains they bought was better than those they used to get at PDS shops.

A conventional fear is that cash will be drunk away by men and will increase alcoholism. Our study found that there was no increase in alcoholism in the cash transfer group. As one man said, “Yes, we still drink as before, but we don’t touch this money which is meant for food.” Women said that they felt a sense of empowerment as the money came into their bank account and they could use it for their families. Since cash is fungible, some families who had a medical emergency used it for medical expenses and a few used it as capital to increase their incomes.

The ration-shop owners saw the experiment as competition for them; this had a most interesting result in that the ration shops in the area became more efficient in the face of the perceived competition! They improved both the quantity and the quality of grain they were giving the households who were not taking cash transfers, and kept their shops open every day!

This experiment showed the way to a policy of choice where a BPL cardholder family would be asked at the beginning of the year whether it preferred cash or food, retaining the right to alter its choice after a year. It is, however, important that the actual cash transfer go to the woman of the household. And it must be conceded that this experiment could succeed in Delhi because it has numerous bank branches. However, in most rural areas, there is a lack of financial inclusion. This lack is even worse for women; that means that this policy will succeed only in well-banked areas, preferably urban, where there is also sufficient food availability.

After decades of debate and experimentation on food security, it is time to listen to the people and let them decide what they want.

The writer is national coordinator, SEWA.