UPA’s cash transfer could fail people’s expectations

The UPA government’s ambitious direct cash transfer scheme cannot be a single bullet to weed out corrupt and vested interests in delivering welfare measures as touted by the government. It is bound to fail unless the ground level machinery is revamped.

The timing of the scheme makes apparent the Congress led government’s intention to earn political mileage by transferring government money directly into bank accounts of people rather than improving efficiency of government’s health and education institutions, key for nation-building.

Government data shows that parents even in rural India are opting for private schools instead of public educational institutions because of in-efficiency and corruption. In fact, fresh admissions in government schools has fallen across India including poor states such as Uttar Pradesh and Bihar.

The public health institutions are even worse. Around 60 % of rural India, as per the latest National Sample Survey Organisation report, visit private doctors for preliminary health check-up instead of public health centers. This is the primary cause for in-debtness of a large section of poor rural folk.

The Manmohan Singh government had tried to abdicate its social responsibilities by announcing direct cash transfer, first in 42 schemes and then in all programmes, as means to achieve efficiency.

The government publicists have cited success of cash transfer in improving social economic and health indicators in Latin American countries including Brazil to hastily enforce the system.

Unlike the UPA government, Brazil has used the direct cash transfer to improve access of food, schools and health institutions to the very poor.

A study by United Nations Development Fund in 2006 reflected the improvement in educational and health indicators of poor in Brazil because of conditionalities linked with cash transfer. Scholarships through direct cash transfer were given in Brazil only if students attended 85% of classes. For children in 0-6 age group, the money was transferred only after children got updated immunization at public health centers.

A recent World Health Organisation study in cash transfer municipalities of Brazil found cash transfer helped the government to reduce the fertility rate resulting in better health of lesser number of children per family. “This demographic transition led to families trying to preserve the future by providing more food to their children,” the report said.

Another difference of the Brazilian model is it covers much less number of people as compared to what the UPA government envisages. The Brazilian direct cash transfer covered 5564 municipalities in the 27 states of Brazil and about 46 million people or 25% of the Brazilian population.

Unlike the Indian cash transfer scheme, the Brazilian legislative backed programmes guaranteeing direct cash transfers which covered only three welfare schemes and was well targeted. They are: (i) families in poverty or extreme poverty (ii) families composed of children from 0 to 17 years of age for education; and (iii) families with a pregnant or lactating woman to improve health indicators. The cash amount to poor is readjusted every two years by a decree in Brazil, said the UNDP report.

In contrast, the Indian government intends to cover a minimum of 400 million poor people and bring over 100 schemes under the ambit of cash transfer, a challenge even accepted by Prime Minister Manmohan Singh. It could prove to be undoing of the government as it lacks mechanism to monitor a scheme with such a huge coverage.

The government’s cash transfer may appear to be good on paper but in reality it may fail to bring the desired results. Jean Dreze, Bharat Bhatti and Reetika Khera visited direct cash transfer pilot in Ram Nagar of Jharkhand and found just 50 workers have been enrolled for a pilot to be replicated nationally. In that also, Khera said the business correspondent (BC) complained of the software glitches resulting in national employment guarantee programme workers having to visit BCs several times to get their wages. “More technology had created more problems,” she told this blogger.

Their experience shows that the probability of taking money to give NREGA wages has shifted from panchayat secretary or a bank official to BC, who can always quote a technical problem, which poor villagers would not understand, to refuse delivery of money. Or in case of public distribution system, a fair price shop-owner can demand money to conduct the computerized transaction so that a poor can get his or her quota of monthly ration.

These are some of the many questions the government needs to answer before telling people that cash transfer would check corruption and improve efficiency. Yes, it could improve government’s balance-sheet as it would enable the government to exclude many existing beneficiaries and not to link the subsidy amount with inflation.

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