Cash transfers are now suggested by many as a silver bullet for addressing the problems that plague India’s anti-poverty programmes. This article argues instead for evidence-based policy and informed public debate to clarify the place, prospects and problems of cash transfers in India. By drawing on key empirical findings from academic and grey literature across the world an attempt is made to draw attention to three aspects of cash transfers...

The current perception that cash transfers can replace public provision of basic goods and services and become a catch-all solution for poverty reduction is false. Where cash transfers have helped to reduce poverty, they have added to public provision, not replaced it. For crucial items like food, direct provision protects poor consumers from rising prices and is part of a broader strategy to ensure domestic supply. Problems like targeting errors...

The National Advisory Council has proposed a framework for the National Food Security Act. But its potential could be wasted by a flawed approach to the PDS. Two years have passed since the Central government announced that a draft National Food Security Act (NFSA) would be posted on the Food Ministry's website “very soon.” After prolonged deliberations, a detailed framework for this Act has recently been proposed by the National Advisory...

A World Bank review of India’s social sector programmes has suggested a smaller public distribution system with more cash transfer, reworking of NREGA as a public works programme for urban areas and finally, a social security package including health care for those without regular employment. The report titled ‘Social Protection for a Changing India’, was commissioned by the Planning Commission. The bank said the three-pillar approach should be combined with social...

Blames FCI’s internal bureaucracy for resisting reforms Much to the dismay of several NGOs that want strengthening of the public distribution system (PDS) in India, the World Bank in its latest report has favoured cash transfers. “In the medium to long term, the report recommends offering households the option of a cash transfer while continuing food-based support for specific situations…,” the bank said in the report titled ‘Social Protection for a Changing...