Overview
India’s welfare architecture now relies heavily on direct cash transfers. While they can lift households out of poverty, the scale of these programmes demands rigorous evaluation, echoing concerns raised centuries ago by the Speenhamland system. The article analyses the current Indian context, the fiscal burden, and the need for evidence‑based policy.
Key Developments (2022‑2026)
- Unconditional cash transfers to women expanded from 2 states in 2022‑23 to 12 states in 2025‑26 (estimated cost ₹1.68 lakh crore, about 0.5% of GDP).
- West Bengal allocated ₹36,000 crore for the Annapurna Yojana, providing ₹3,000 per month to ~1.3 crore women.
- Tamil Nadu earmarked ₹14,412 crore for the Kalaignar Magalir Urimai Thogai in the 2026‑27 interim budget.
- Assam set aside ₹5,000 crore for the Orunodoi scheme.
Important Facts
The Economic Survey 2025‑26 notes that transfers to women constitute 11‑24% of monthly earnings for daily‑wage workers and 11‑87% for self‑employed women. The data underline how cash assistance can become a permanent fiscal commitment if not paired with clear targeting and impact assessment.
According to PRS Legislative Research, the rapid expansion of cash schemes has placed a sizable claim on state finances, raising questions about sustainability and opportunity cost.
Exam Relevance
Understanding the evolution of welfare mechanisms is vital for GS1 (Historical perspectives on poverty alleviation), GS2 (Policy formulation and fiscal federalism), GS3 (Economic implications of large‑scale transfers), and GS4 (Ethical considerations of state responsibility). The historical Speenhamland system illustrates how well‑intentioned subsidies can distort market signals, a lesson applicable to today’s Indian programmes.
Studies such as the one by the ADB for the 16th Finance Commission highlight the lack of a systematic dataset on cash‑transfer expenditures, pointing to a gap in evidence‑based governance.
Way Forward
For each large‑scale scheme, a welfare impact statement should be prepared, covering:
- Objective and eligibility criteria.
- Projected coverage and five‑year fiscal cost.
- Alternative policy options.
- Estimated leakage and exclusion errors.
- Measurable outcomes (consumption, debt, health, education, labour supply, women’s bargaining power, subjective well‑being).
Post‑implementation, household surveys must capture both receipt and impact, and anonymised micro‑data should be released for independent research. Such transparency will enable parliamentary and public scrutiny, ensuring that cash assistance complements, rather than replaces, essential public goods like health centres, schools, and childcare.
In sum, while cash transfers can alleviate immediate distress, their long‑term success hinges on rigorous evaluation, clear targeting, and integration with broader welfare infrastructure—principles that echo both historical lessons and contemporary policy imperatives.