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Resource centre on India's rural distress
 
 

Transfer ideas
Even as the National Rural Employment Guarantee Act enters its sixth year, Bihar Chief Minister Nitish Kumar said in Delhi on Thursday that cash transfers were the answer to the eternal questions about inefficiencies in government schemes. He had tried out direct cash transfers in his effort to give Bihar’s girls bicycles, he said, and discovered that the programme had a “92 per cent success rate”. No programme, he said, of the Centre or in any other state can boast anything similar. He went on to argue that cash transfers would “plug a lot of leakages in the [food] distribution system as well, as the PDS is not working really. Also it will give the poor an option in terms of their spending.” Universalisation of the public distribution system, he said, should take a backseat to transfer-based reform.

This is not the first time that Kumar has spoken in favour of transfers, but these are some of his firmest words yet. They also mark something else, his ability to transfer a policy idea into the political realm. It isn’t just his name-checking of the bicycle scheme, widely identified as one of the key reasons for his government’s popularity in Bihar. It was also his clear identification of universalisation of the PDS — an idea associated with Congress president Sonia Gandhi’s National Advisory Council — as the wrong idea at this time. Nor is he the only chief minister to talk of cash transfers: the Congress’s Sheila Dikshit, the chief minister of Delhi, has also been a proponent. Local-level leaders in Andhra Pradesh have also spoken of transfers as a possible path to reform.

There continue to be major roadblocks in any shift to a transfer-based system for large government schemes. But, as Prime Minister Manmohan Singh said at the ceremony marking the NREGA’s fifth anniversary, delivery mechanisms must be smartened up, and modern technology is available to help us do it. It is difficult to avoid the sense that our politics has become more welfarist than it was some years ago. The focus must now be, however, on ensuring efficiency — and thereby on fiscal prudence. State-level leaders who have to deal with implementation problems, like Nitish and Dikshit, should be listened to carefully. Our debate on mechanisms should widen, and definitely take into account ideas like conditional cash transfers. More, our politics, too, should start to debate policy ideas. Nitish Kumar has shown, after all, it is workable.