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Vandana Kohli
Monday , December 03, 2012 at 12 : 15

Direct Cash Transfer: the cart before the horse?


In the early 80s, there was a scramble for Video Cassette Recorders or VCRs in India as more and more people watched films at home at their own convenience. One VCR that was much sought after was the Akai VS-2. It was a high quality product and the first to have an Interactive Monitor System or an on-screen display.

But the Akai recorders were also the most troublesome often demanding more service and repair, for a reason. They were sensitive instruments, and they weren't built for a dusty country such as ours.

In effect, while there was nothing wrong with the product, the environment in India didn't quite work for it; quite like trying to plant a high-quality seed in inappropriate ground.

This might be a somewhat long-shot analogy, but the Direct Cash Transfer scheme announced by the Government last week conjures up such images. Are we introducing something we don't quite yet have the environment for?

Behind all action lies intent. Beyond all action, lies effect.

Perhaps we could look at the scheme through these three words - Intent, Action and Effect.


The government's proclaimed intent is to plug inefficiency. Direct cash transfers into the bank accounts of the beneficiaries would help weed out corruption that inevitably happens along the way when the government provides subsidies instead.

That's noble. "Magical" even, as the Finance Minister puts it.

Could there be another intent? Plausibly, since it stares us in the face.

Studies on direct cash transfers around the world have indicated a direct link on at least one thing - voting patterns, which may then sound like this - "You're giving us the money? One guess who's getting our vote!"


Now that it's been announced, it might happen.

How? Whom will the money go to? Do we have irrefutable data on numbers, status and identity of all citizens of the country?

No, we don't, not quite yet, though it's happening, with the Unique Identification Number that each citizen will ultimately have. At the moment, about one-sixth of the population has it.

Assuming that there is some thought behind this, has the government then chosen the scheme to be implemented where all citizens have their national identification numbers in place? Perhaps they will.

The scheme has been announced in stages, presumably so that by the time it is fully implemented by January 2014, everybody will have their Unique Identification numbers.

In the meanwhile, with one date less than a month away, bureaucrats across the board have been put under pressure, pressure that smacks of mindlessness.

Within a month, they have to make sure they have data on identity, that financial systems for the direct transfer of cash are in place from top to bottom (bank branches and bank accounts) and importantly, that the technology from systems at the center, to the computer at the local level are connected without glitches.

It's the cart before the horse. Quite the way development happens in our country. First you have plots sold for houses and apartment blocks. Then, once these blocks come up, we realize we need infrastructure - electricity, water, drainage, trash collection and other such 'minor' issues...(Look no further than Gurgaon as an example of that pattern).

Given all that, assuming once again that through this mindless scramble, somehow all the data required, all systems and all technology will happen in time, who will the money go to finally - the man or lady of the house?


Studies after studies by international and national development agencies have indicated that hard cash given to men in poor income groups is most likely to go in drink, gambling, disputes and other unproductive enterprise. Money given to women, on the other hand, goes a much longer way towards the welfare of the family in food, clothing, healthcare and education.

Then again, marginalized groups such as women and children are able to avail of welfare schemes such as vaccinations and pre-natal care schemes precisely because there is no money involved, but because they offer welfare in terms of services. Were these to translate into cash, there is little chance that the cash would be spent on those particular services.

Lastly, as several voices have already pointed out, direct cash transfers are effective if they are conditional, and if there are systems to monitor them properly.

In this case, neither prerequisite is fulfilled.


Can the government still lift this scheme beyond the realm of doubtful intent and seemingly haphazard action into something profound and useful?

It could, if it so wishes.

Where relevant, such as for cash instead of subsidies on kerosene and LPG, it could make women the beneficiaries of the scheme. It could also identify a specific group as a target group, say, women-led panchayats in states it plans to implement the first or second stage in.

This way the Unique Identification Authority of India would have a precisely targeted group to provide national Identification numbers to within a specified period of time. Banks and technical services could come up simultaneously, wherever they are needed, rallying around this specified group.

Identifying a target group such as women-led panchayats would also provide more focus for local administration to monitor.

And the message this would send to all would be heartening - that this cash is meant for the welfare of the family, and that alone.

As of now, the government is on precarious ground. Its intent is suspect, its actions scattered and desperate. That doesn't make for ground on which anything of significance may take root and grow strong. Nor will it provide a base for anything to move on - not the cart, nor the horse.


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More about Vandana Kohli

Vandana Kohli is an acclaimed filmmaker, musician and photographer. She has recently researched, produced and directed the award-winning international documentary ‘The Subtext Of Anger’. Vandana has scripted, directed and edited projects for clients that include The National Geographic Channel, The History Channel, Doordarshan, various agencies of the United Nations and the Government of India. You can find out more about her at www.vandanakohli.com.