2. Cash Transfers
•Cash Transfers are programmes that transfer cash
generally to poor households, on the condition
that those households make prespecified
investments in human capital of their children.
•The national and international commitments to
global poverty reduction reflected in the
Millennium Development Goals focused attention
on the extent and persistence of poverty in
developing countries
3. Eight Goals of Millenium
Development for 2015
• 1Eradicate extreme poverty and hunger
• 2Achieve universal primary education
• 3Promote gender equality and empower women
• 4Reduce child mortality
• 5Improve maternal health
• 6Combat HIV/AIDS, malaria and other diseases
• 7Ensure environmental sustainability
• 8 A Global Parnership for Development
4. Types of Cash Transfers
In recent times, cash transfers made by developing
country governments have been either
Conditional (i.e. subject to the beneficiaries
meeting certain pre-specified conditions such as
children attending school, families visiting health
clinics for check-ups, or immunizing children as
per the prescribed schedule and the like; or
Unconditional, often to certain categories(such as
pensions for older people or child support
grants).
5. Cash Transfers- International
Experience
•Brazil started the CCTs in 1990 and expanded rapidly in 2001 and
2002. The other Latin American countries like Columbia, Mexico,
Honduras and Jamaica started the programmes subsequently between
1998 and 2002.
•In Asia, Bangladesh established `Female Secondary School Assistance
in 1994 on the condition of school attendance and girls remaining
unmarried. Subsequently, Cambodia, Turkey, Egypt and Philippines
started the Cash Transfers. Interest in programs that seek to use cash
incentives to household investments in child schooling have spread
from developing to developed countries most recently to programs in
NewYork city and Washington DC.
6. Universal provision, on the other hand, has
several benefits:
• Historical evidence shows that countries (even
those starting from low levels of development)
that adopted relatively less targeted approach
in their social systems , have been more
successful in reducing poverty as well as
inequality.
• As Mkandawire (2005) notes, universal access
is most effective in ensuring “political support
by the middle class of taxes to finance welfare
programmes”.
• Universal schemes are easier and less costly to
Administer In sum, cash transfers can play important positive
7. Cash Transfer s all over world
•Cash transfers in Africa –
• Conditional Cash Transfers in Latin America
•Cash Transfers : Lessons from Africa and Latin
America
• Social Cash Transfers
•India’s Direcyt Cash Transfers :
9. Human Development Index
• Multiple Interventions to tackle poverty is required
• Looking beyond financial measures of Development
• For Example measures such as medical care available, Education,
Equality and Political freedom
• Most prominent contemporary Development Economist Nobel
Laureate Amartya sen
• Recent theories revolved around questions about what variables
or inputs correlate or affect Economic Growth the most
• Education, Government Policy stability, Tariffs and subsidies, Fair
Court systems, Available Infrastructure,Medical Care, Clean
Water,ease of Entry or Exit in Trade and Equality of income
distribution ( Gini- Coefficient ) – Macro Economic Policies
• Education enables countries to adapt latest Technology and create
an Environment for new Innovations
10. U.N. Secretary General Ban Ki-Moon,
emphasises :
• "Sustained and equitable growth based on
dynamic structural economic change is
necessary for making substantial progress in
reducing poverty. It also enables faster
progress towards the other Millennium
Development Goals. While economic growth
is necessary, it is not sufficient for progress
on reducing poverty."
11. • 29 schemes have been brought under the ambit of the
cash transfer programme. These are mostly scholarship
schemes from ministries like Social Justice, HRD and
Minority Affairs.
• In his budget speech last year, then-Finance
Minister Pranab Mukherjee had announced that UPA2
was planning to reroute subsidies in kerosene,
fertilisers and LPG as cash transfers to beneficiaries. Of
these, kerosene and LPG might be rolled out before the
2014 elections. Food and fertiliser are not being
touched right now.
• Fertilizer subsidy, Food security, Kerosine and LPG
subsidies were not included immediately for the
complexity of the programmes
12. Is India Ready?
• The success of cash transfers depends on people
having bank accounts, money going into the right
account, and people having easy access to those
accounts. Right now, it's not clear if India will be
ready as per schedule, especially for villagers and
the urban poor.
• The Unique Identification Authority of India (UIDAI)
has issued only 210 million Aadhaar numbers. Banks
are on an account-opening spree, but it is not clear
if they will cover all in time. The question is whether
the promise of cash transfers will have people
flocking to banks and enrolment centres.
13. • Money coming into a person's account is one thing. That
person being able to withdraw it is another. The second
question is especially relevant to rural India, where bank
branches and ATMs are rare. UPA 2 is betting on banking
correspondents (BCs) with handheld machines (Micro-
ATMs )enabling cash withdrawals and deposits in every
panchayat. This last mile architecture is still a bone of
contention.
• The UIDAI had recommended a country wide Micro ATM
network. In contrast, the finance ministry's model can
deliver cash transfers even to those without Aadhaar
numbers. However, another part of this plan also creates
last mile monopolies — loosely put, one banking
correspondent for ever
14. Cash Transfer- Advantages:
•Adhar based central data base with biometric identity will
help in eliminating duplicate and ghost ration cards and
eliminate the enormous wastage by getting rid of middle
men
•Amount can reach the right beneficiary without resorting
to any laeakage or administrative corruption and delays.
•The same amount can be utilized for final targeted
recipients with more money.
•Short term poverty reduction can be linked to long term
goals of health, education and other human development
indicators
•It will cut down the costs of administrative machinery
•The LPG and Kerosine at market prices will reduce
adulteration and misuse.
15. Problems & Pitfalls
•Change in fluctuation of market prices may not be always
commensurate with the the subsidies
•Market Prices may sometimes dominate where smaller number of
private sellers are available not much competition among them
•Availability of bank branches and ATMs in the vicinity of rural
areas is a major problem for implementation as only 50 % of India is
covered by financial inclusion. Travel to the nearest banks from
rural areas will cost the beneficiary a sizeable share of money
received and also loosing the wages for the day
•In distant tribal areas, no shops to sell at market prices and banks
in the vicinity. Realiostic solution could be improving the existing
PDS. The existing system of PDS to continue in some needy parts for
a while.
16. •Implementing Adhar system nation wide has its
costs matching with the administrative costd of
PDS
•Cash Transfer may plug some leakages but not
all like issue of BPL certificates by a politician as
in NREGS
•Ensuring Issue of Adhar card to every eligible
beneficiary is a must for effective
implementation of the scheme.
•Government seem to be aware that any large
scale goof up in new subsidy sysyem would
backfire.
17. Cash transfer programme - challenges
•Designing effective exit strategies – Strategic exit factors are
(i) the adequate utilization of existing data for systematic
identification of beneficiaries, and (ii) the performance of the
economy in creating employment and expanding the labour
market.
•Supporting households upon exiting the programme –
programme graduates need other forms of support to ensure
that they do not fall back into poverty when no longer eligible
for cash transfers.
•Making programmes work both as safety nets and
springboards – Cash transfers and
•conditionalities do not affect structural poverty; it is
necessary also to promote access, supply and quality of
services like education, health, vocational training and micro-
credits.
18. •Expanding programme eligibility – Some poor people live outside
narrowly defined family households and age groups. Poverty
impact would be greater if households without children and elderly
were included, as well as single persons.
•Avoiding the dichotomy “Targeting vs. Universalism” – Targeting
social protection is a strategy for preparing the integration
of poor and excluded people into full
citizenship; in highly unequal societies it is necessary to
combine targeted and universal programmes.
•Evaluations – It is necessary to evaluate programme outcomes
and processes to learn more about what works, what does not, and
why. Evaluations are also useful for enhancing cooperation,
disseminating ideas, training agents, improving implementation
efficiency, prevent distortions, and for measuring impact.
Moreover, evaluations are persuasive tools for finance and planning
and for informing the public political debate on social inequality.
19. •The major challenges for the new programme
would be opening of savings bank accounts in the
names of poor households and even listing out the
poor out of the households which were given
Adhar cards.
•The number of Bank branches available in the
country are about 70,000 compared to nearlysix
lakh rural habitations in the country and making
the nearest bank available to the beneficiary to
open the savings bank account would be a
herculean task given the short time available for
implementation
20. To issue Adhar card to all eligible households within the
due date itself is a stupendous task. According to some
critics it is the political necessity that made to announce
the programme much earlier than the delivery systems
could be worked out. In view of the complexity of issues
involved in implementation Government has not yet
announced for inclusion of cash transfers in respect of
schemes like PDS, Fertilizer subsidy, Kerosine and LPG
subsidies.
