(Un)Conditional Cash Transfers - Gut the soul of a Nation
December 15, 2025 | ~7 mins read
First major, nationwide cash transfer scheme in India was the Direct Benefit Transfer (DBT), launched by the central government on January 1, 2013, to directly put subsidies and welfare funds into beneficiaries' bank accounts. This further expanded into the JAM (Jan Dhan, Aadhaar, Mobile) trinity for widespread disbursement of subsidies, social welfare and incorporating crores of citizens into formal economy. However, the implementation has been impactful yet the policy and ideation has suffered degradation, corruption and malice. Minimization of leakages, verification of beneficiaries and transparency were the three pillars of this financial upliftment, which have since been corroded into cheap tools for favouring incumbency, capital mismanagement and outright theft.
The Prelude
We, the people of India, having solemnly resolved to constitute India into a sovereign SOCIALIST secular democratic republic. Socialist in policy and nature not in practice and intent, which has given rise to Performative Socialist State or PISS for brevity. The Union and States have decreed themselves to implement the Nehruvian vision of socialism neither through capital expenditure, infrastructure augmentation, nor via social upliftment, but through the distribution of money to the poor for election theatrics. Observing through the lens of economics, one can infer the mechanism to be Capitalism just with extra steps. But, we are jumping to conclusion, let's go over the arguments and evidence to reach a conclusion.
There were multiple schemes started by the Union Government of India (GoI) to provide DBT to the impoverished segments either via cash, subsidies or social security. The major one's that surface are:
- Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) to provide an annual income support to eligible farmer families.
- Pradhan Mantri Fasal Bima Yojana (PMFBY) for crop insurance via claim settlements and premium subsidies
- PAHAL which is the cash subsidy on domestic LPG cylinders
- National Social Assistance Programme like National Disability Pension Scheme, or Indira Gandhi National Old Age Pension Scheme and widow pension
- Pradhan Mantri Vaya Vandana Yojana to provide assured monthly pension to senior citizens
- MGNREGA for wage and rightful work for rural development
The origination of these schemes was economically favourable for multiple reasons.
They were culminated following close observation of developed nations (like Russia, America, EU) policies and superimposing them on the unique dynamics of Indian national identity and family values. A major example of this is almost all schemes in western nations are aimed at individual erstwhile, Indian schemes identify woman of the household as the prime beneficiary. The schemes created a socialist framework, where the beneficiary is also a stakeholder. Financial losses are mutualised and gains are redistributed to society. Policies formulated on mathematics, economics and overall utilitarianism incorporated tools like re-insurance by private entities, mandatory investment in government bonds, favourable global trade surplus and sound finances to loosen the burden on the masses and curbing the diversion of funds to secondary and tertiary consumption.
Numerous studies and surveys (NFHS and multiple independent) have shed light on the positive impact of these schemes. Besides, being a government employee working with SHGs at grass root level and interacting with financially underserved and marginalised communities has provided with vast anecdotal evidence that the administration and implementation of these were carried out with prudence and left a lasting economic impact on the families of some of the most poverty stricken villages and talukas of rural India.
Not a socialist utopia, but far from a religious, communal and state-govern dystopia.
Everything in India is political
The deep integration of politics into Indian society, where governance, economy, social issues (caste, religion, development), and daily life (from infrastructure to media) are all intertwined with political decisions, ideologies, and power dynamics, making it a pervasive aspect of national identity and public discourse.
The lack of Union government direct interacting with state subjects and distance between the subjects and the administration (Delhi) provided a safeguard against misuse by terminal policy implementation agencies. Benefits were standardised and went through rigorous internal deliberations and local political influence was minimal albeit leaving a few prominent states (that are co-incidentally also given the nickname of BIMARU States).
It wasn't long before the States recognised the potential of socialistic schemes for ensuring political prowess in elections. The vision of converting Indian landscape from gapping economic inequality to economic parity for majority of its citizens was soon abandoned for incumbency propagation and political stability of rule (not policy).
"God made men, but Sam Colt made them equal" fits the anecdote fittingly, Colt made the widespread revolver gun and gave every individual access to a lethal weapon which was thought of as the ultimate deterrent through mutual destruction. However, we got gun violence and indiscriminate slaughter. Socialism was thought of as a means for equality of opportunity and prosperity through collective effort, however it was converted to a tool in the hands of capitalists.
These malpractices are in full display during the Dance of Democracy, the largest exercise of voting rights in the largest democracy of the world, applauded for its million plus polling stations and over 600 million voters, riddled with corruption. Examples from several states like Bihar, West Bengal, Karnataka, Odisha are ample available. Let's dive into them:
| Scheme | Objective | Annual Budget (1,000 Cr.) | State |
|---|---|---|---|
| Mukhyamantri Majhi Ladki Bahin Yojana | Women aged 21 to 65 years | 18 | Maharashtra |
| Gruha Lakshmi Scheme | Women heads | 29 | Karnataka |
| Mukhyamantri Ladki Bahin Yojana | Women aged 21 to 65 years | 21 | Madhya Pradesh |
| Kalaignar Magalir Urimai Thogai Thittam | Women heads | 13 | Tamil Nadu |
| Laxmi Bhandar Scheme | Women heads | 24 | West Bengal |
Similar tragedy is observed in Assam, Bihar, UP, Rajasthan and other states.
The peculiarity of the policy lies in the timing of announcement and disbursement of the money. The moral code of conduct enforces the states to refrain from any monetary distribution as the date of general election draws near for obvious reasons, however just like electoral bonds are outside the purview of scrutiny, DBT are treated as legitimate and constitutional (as per politicians of the incumbent party).
God's in His heaven; All's right with the world!
If we dissect the ongoing Jagananna Amma Vodi scheme in Andhra Pradesh, a Conditional Cash Transfer (CCT) scheme focused on children's education and long-term financial security, which is economical universal in nature. Each eligible child, no bar on the child limit, no bar on Above Poverty Line (APL) households, will be awarded the assured sum from government coffers. Unrestricted nature of the scheme exposes venues of exploitation and adverse secondary outcomes. Instead of making households financially literate, and preaching birth control, the state ensured a surplus of young children to impoverished households based on ephemeral policy. The policy may change in 3 years or in wake of a administration change, however the children born with this objective can't be disposed of.
Rigidity of implementing such monetary policies is another point of contention, the policies cannot be repealed by the next government in fear of retaliation and discontent in the next elections. This creates a feedback system of either maintaining or strengthening such policies and simultaneously diverting funds from capital expenditure into revenue expenditure. The spending spree is fuelled by state-government bonds, purchased on quasi-sovereign trust by the Institutional players (LIC, General Insurance, etc.). Direct monetary benefits may appease the immediate needs of the masses, but the cost will be paid by future generations that will inherit a huge debt.
Fiscal Crowding Out
Economists worry that massive cash transfers take money away from essential public services. State expenditure of thousands of crores on monthly stipends (like the Ladli Behna or Majhi Ladki Bahin schemes), leave measly amount for real infrastructure development that sweet the current circumstance rather than envisioning the long-term plan to create jobs or pull people out of poverty permanently.
A spectacular example of this is PM-Ayushman Yojana. Every year post independence GoI has allocated less than 5% of budget towards healthcare, while has lead to delipidated conditions of majority of hospitals and Primary Healthcare Centres. Salient of this, and its incompetence to fix the broken healthcare services in the country the GoI initiated the process of outsourcing the task to private healthcare systems, with the bill being foot by the GoI. In ideal conditions of this working, the money is being transferred from the government directly to capitalist healthcare providers. However, the case is far from ideal, as hospitals are refusing PM-Ayushman cards and demand a payment above and beyond stipulated by the government for the same treatment. With no place for appeal and lack of political inclination, the common man is left to die or be extorted in the world's 4th largest economy.
The current situation is bleak with no light at the end of the tunnel. Rising communal tensions, religious intolerance and lack of empathy, fuelled by uneducated and agitated youth, the India we know today may be drastically different in the near future and possibly for the worse.
