DIPANKAR GUPTA
Cash transfers limited to a few schemes and without strings attached make for a compelling election strategy
Offering cash transfers before elections is an inspired move. Like birthday gifts, election promises must come brightly packaged, look good for the event even if they collapse in a heap afterwards. By then, another birthday, another election and another promise!
In election campaigns, it is important to get the best promise out first. Performance can catch up, if at all, much later. There are five full years for that and time enough to waffle, dawdle and put up false figures. The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was a great promise, so what if it failed to perform in most parts of the country? Its success in a few showcase States like Kerala provided the juice for excuses elsewhere.
Like all good gifts, an election promise must keep up with the times and cash transfer does just that. There is no point in presenting kirpans when Sikhs want economic opportunities. This is why when Akhilesh Yadav traded in his knuckledusters for laptops, it worked wonderfully for him in Uttar Pradesh. Caste and minority consciousness are yesterday’s promises and, as the Congress learnt in U.P., ready for the trash can. What kind of laptops and when, are issues for another day; it is the promise that must draw in the voters now.
The United Progressive Alliance (UPA) proposal for cash transfers comes in a see-through gift wrap. It allows a peek at what it looks like but not what it feels like. This is what makes the cash transfer promise so electorally compelling. What is visible is limited cash transfer, but what is exciting is that it promises much more. For now, cash transfers will concern payments related to pensions, scholarships, and the like. These are low cost deliverables as they are already monetised.
But the dream team for cash transfers, which includes money for food, fertilizer and fuels, will have to wait. Their prices are difficult to control for they have a mind of their own. Also, it is hard to predict how the market will behave once the Public Distribution System (PDS) is dismantled. Wisely then, the UPA is silent about them. Five years from now, the easy victories will be paraded, just as Kerala is put out as MGNREGA’s success story. In this case, once again, those chapters that are not exactly bedtime reading will stay unopened and forgotten.
IT WORKED IN BRAZIL
Also, cash transfer has an international gloss about it. It has worked in Brazil and how. Even the World Bank has certified it as an ace instrument for poverty alleviation. So what if only about 15 per cent of Brazilians live in villages while nearly 70 per cent do in ours? So what if only 6.1 per cent of Brazil’s population earns less than $1.25 a day compared to a crushing 32.6 per cent in India? These complications should not come in the way of a good promise, especially when there is an election round the corner.
The fact that in Brazil it is not cash transfer but “conditional” cash transfer is a little detail that can be ignored. For the record, “conditional” cash transfers are linked to several human development issues which is why they are more than simple anti-poverty programmes. In Brazil, poor families have to satisfy strict conditions before they qualify to receive cash transfers. They must make sure that their children have a high 85 per cent attendance in school and that their nutrition and growth charts are climbing up the right slope. In addition, all children under five must have the full complement of vaccines and no excuses.
Mothers too must submit to pre- and post-natal checks. Failure on any of these counts, and the cheque will not be in the mail.
For these “conditions” to be met, it is imperative that adequate medical and school facilities exist. Brazil has moved swiftly in that direction as it devotes above four per cent of its GDP to health and another four per cent to education. In contrast, India spends just one per cent of its GDP on health which is why cash transfers here had better not be “conditional.” Our existing educational and health infrastructures are too weak to bear the additional pressure of “conditional” cash transfers.
Under these circumstances, if “conditional” cash transfers are insisted upon in India then that would drive people to private health and education providers. They would then be the new parasites. Fortunately, the UPA is playing within its limits and is not burning a hole in its pocket. As long as Brazil acts as a convenient metaphor, why step into the kitchen and spoil the party?
OPENING BANK ACCOUNTS
Emaciated though our cash transfer scheme is, it nevertheless has a huge task ahead. So far, a little over 200 million Aadhar cards have been issued, but that is a long way from being translated into bank accounts. The Reserve Bank of India is yet to come out with guidelines on this matter, though that might happen any day soon. Yet it will require a fair amount of rejigging as banks will now be required to lower their guard when customers come in to open accounts. Nor is the report of the pilot Kotkasim project encouraging. Though it was near test tube incubated, it failed on practically every front; from the opening of accounts to getting cash in the bank.
And there will be new accounts, millions of them, if the cash transfer scheme is to save face. So far, only about a third of our population has a bank account. In India, sadly, the poorer the State, the greater the pressure on banks. While in developed regions like Delhi, Chandigarh and Goa a bank serves between a manageable 3,500 to 6,500 people, the number jumps to over 21,000 in a place like Bihar. Not surprising then, after hospitals and courts, public sector banks scare people the most.
MIGRATION
In the case of cash transfers it is necessary to factor in an added twist. Our people refuse to sit at home: they migrate everywhere in search of work or marital partners, though sometimes the two look alike. It is, therefore, not enough to have bank accounts at one’s address; it is necessary to service people who are constantly on the move. As the Census figures show, upward of 90 million people, in the past decade alone, have changed their residence and the Indian Railways sells over six billion tickets annually.
It is likely that some banks will manage to overcome these problems, and do well or passably well in places like Delhi and Goa even if they flop elsewhere. Delhi and Goa will then become the “new Kerala” as far as the banking sector is concerned. Like MGNREGA again, success in a limited sector will help cloud failure in large parts of the country.
CRORES AND CRORES
The stark truth in India is that roughly Rs.3.5 trillion is spent every year in subsidies and it is anybody’s guess what proportion of this lines undeserving pockets. It cannot be denied either that the poor should have bank accounts or that our economy should be less cash driven than what it is today. Cheques are rarely issued, which is why the intermediaries with their scissor hands are ever ready to take their cut. So if the promise of cash transfers strikes a bell, remember it tolls for so many.
Given the complications of a “conditional” cash transfer, it is a great election move for the government to promise cash transfers, but only in a limited fashion. Care must be taken that those in power are not overly persuaded by their own promises and begin to behave rashly. A hasty decision to abandon the Public Distribution System (PDS) or give money only to the women of the family, Brazilian style, would be extremely unwise.
The PDS may not have the whitest shirt, but its performance is not all bad. Different studies, such as those conducted by the National Federation of Indian Women and the Self Employed Women’s Association (SEWA), have come up with contradictory conclusions. While the former unilaterally support the PDS, the SEWA research is guarded in this regard as some women prefer cash transfers, but there are others who are not so sure.
Nor would the UPA do itself a favour if cash transfers were made to the woman’s account, bypassing her husband. If it did that, cash transfers would meet with the same fate as the Women’s Reservation Bill did in Parliament. In Brazil, the woman gets the cash and if the man wants a booze for the buck he has to take his missus to the liquor store. This takes away much of the sparkle from the boys’ night out. This is also why 85 per cent of cash subsidies are spent on food in Brazil.
That the UPA has not spelt out any condition in its cash transfer scheme is a well plotted election strategy. If it delivers in a limited way to a limited population it can draw enough goodwill to shout down the many Kotkasims that are bound to occur.
But by then it’s party time again: another election and another round of promises on the house.
(Dipankar Gupta is a former professor of Jawaharlal Nehru University.)
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Brilliantly written article! A good dissection of the entire issue.
from: Aditya
Posted on: Dec 6, 2012 at 12:59 IST
Sociologist Dipankar Gupta demystifies claims of the Congress Party that the “Money Transfer Scheme” is going to be a boon for the exploited- poor folks in India due to already prevailing structural deformities as an inherent element in our democracy and economic system. He has fantastically shown how the “the Gift” meant for the 2014 election is stuffed with empty promises like that of all the previous election –based offers and policies such as MNERGA. The Congress has fixed the FDI for the profit-hunting American and Indian businessmen and has started throwing money Schemes on the face of the labouring mass that have only energyless bodies to be sold for daily wages. So far, scrutiny of political system and policies, done by scholars, has been a reassessment of tricky political behaviour and total looted wealth rather than an attempt to give a theoretical exploration for a system change. I wish Mr. Dipankar had touched upon aspect of an emerging alternative political structure for “Aam Aadmi” in India.
from: A.Kannan
Posted on: Dec 6, 2012 at 11:35 IST
I suspect the timing of the Government's move to change over from PDS to cash transfer especially when Walmart & Co. is around the corner to tap the market. If Walmart & Co. comes to India cash transfered by the authorities perhaps may end up with it thereby indirectly subsidising the corporate houses.
from: Arun sivagurunathan
Posted on: Dec 6, 2012 at 09:27 IST
A mammoth scheme unwittingly prepareed by a famous IT expert which will be used by the powers to seek election votes. Remember in TN politicians used the age old system of 'arti' to put cash in the arti plate quoting custom. A brazen act of bribery. This has potential of being grossly misused by the political powers to get them voted again and again and sit in power for ever. People should watch out this drama carefully
from: s.subramanyan
Posted on: Dec 6, 2012 at 09:16 IST
If its a political article then its cribbing. Talking vaguely and about points that can be overcome. If the learned Professor is against money transfer then he up against an idea whose day has come. Long ago in 1980s the company where I was working (MNC) carried out assignment where it was found that a regular stores requisition paper cost Rs 600 to the company. By switching over to computer this cost was reduced.
from: C. Nandkishore
Posted on: Dec 6, 2012 at 08:11 IST
