News / Asia

India Replaces Subsidies for the Poor with Cash Transfers

Impoverished and homeless people stand in a queue to receive free food from a volunteer organization in front of a temple, in New Delhi, India, January 1, 2013.
Impoverished and homeless people stand in a queue to receive free food from a volunteer organization in front of a temple, in New Delhi, India, January 1, 2013.
Anjana Pasricha
In India, the government has begun rolling out an ambitious plan to replace subsidies with direct cash payments in a bid to eliminate graft. The government says the cash transfer plan will benefit millions of poor people, but questions have been raised about how it will work.

Since the start of the new year, 245,000 people across 20 districts in India are getting pension and scholarship money transferred directly into their bank accounts, instead of having to wait to receive it from post offices or bank officials.

Officials say when fully implemented, the cash payments will help fix a broken-down system for the delivery of subsidies that amount to nearly $58 billion a year.

The impact of these welfare measures on reducing poverty has long been questioned, because subsidies for food and fuel are often siphoned off by corrupt officials or people are forced to pay bribes to receive them.

India’s Finance Minister P Chidambaram calls the cash transfer scheme a “game-changer” for poor people. “There will be no leakage. There will be no rent seeking anywhere in the system. The beneficiary will not have to pay any kind of money to get his benefit,” he explained.

India is modeling the scheme after efforts in Brazil and Mexico where such experiments have been successful. It hopes to use a biometric electronic number being given to every citizen to transfer the cash into their bank accounts.

But doubts have been expressed about how the scheme will work in the vast country of 1.2 billion people. Only 40 percent of Indians have bank accounts and only 36,000 out of the country’s 600,000 villages, where the poorest live, have banks.

Even some people who have bank accounts have voiced their preference for getting food rations rather than cash. One of them is Kanta Das. She lives in a poor neighborhood in New Delhi and participated in an experimental program to study the switch from food rations to cash.

Kanta says her family opted to receive rations in place of cash, because the money was often spent by household members on other items. As a result, she says, her young children got less food.

The government says it is proceeding with caution and for the time being, it will not switch to cash transfers for food and fuel subsidies.

However, Finance Minister Chidambaram hopes the cash transfer scheme will save the government billions of dollars by eliminating fake beneficiaries and middlemen.

“No one person can receive two benefits under the same scheme using two identities and no one can falsify an identity and get a benefit," he asserted. "That will result in considerable savings to the exchequer. The efficiency gains are incalculable. Today the system has to go through several layers, it is a maze.”

Opposition parties have voiced concerns about the cash scheme, calling it a ploy to buy votes before general elections which are due next year.

The government says that by the end of the year, it hopes to expand the new policy through most of the country.

You May Like

Video Indiana Controversy Points to Divergent Notions of Religious Freedom

Gay-marriage opponents are looking for ways to maintain their beliefs in face of changing culture, one writer says More

UNICEF Denies North Korean Measles Outbreak

Agency dismisses Russian media report after government, WHO assurances More

Turkey Seen Taking Harder Stance Against Militant Kurds

Stance comes as President Recep Tayyip Erdogan is being seen as moving closer to generals More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Indiana Controversy Highlights Divergent Meanings of Religious Freedomi
X
Jerome Socolovsky
April 01, 2015 1:41 AM
Indiana’s state government has triggered a nationwide controversy by approving a law that critics say is aimed at allowing discrimination against gays and lesbians. The controversy stems from divergent notions of religious freedom in America. VOA's Jerome Socolovsky reports.
Video

Video Indiana Controversy Highlights Divergent Meanings of Religious Freedom

Indiana’s state government has triggered a nationwide controversy by approving a law that critics say is aimed at allowing discrimination against gays and lesbians. The controversy stems from divergent notions of religious freedom in America. VOA's Jerome Socolovsky reports.
Video

Video Nigerians Welcome Buhari's Return to Power

Crowds of jubilant Nigerians nationwide have celebrated the return to power of former military ruler Muhammadu Buhari. The retired army general won this year's presidential election with more than 2 million votes more than incumbent President Goodluck Jonathan. Buhari's supporters hope he can strengthen the country's economy and security once he takes office in late May. Zlatica Hoke has this story.
Video

Video Report: State of Black America a 'Tale of Two Nations'

The National Urban League has described this year's "State of Black America" report as a "tale of two nations." The group's annual report, released earlier this month (March), found that under an equality index African Americans had only 72% parity compared to whites in areas such as education, economics, health, social justice and civic engagement. It’s a gap that educators and students at Brooklyn’s Medgar Evers College are looking to close. VOA's Daniela Schrier reports from the school.
Video

Video Film Tells Story of Musicians in Mali Threatened by Jihadists

At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video Gamma Ray Observatory to Open Soon in Mexico

American and Mexican scientists have completed construction of the world's largest gamma ray observatory, situated high in central Mexico’s Sierra Negra Mountain. The observatory's huge array of water-based detectors will soon start discovering secrets about black holes and supernovas. VOA’s George Putic reports.
Video

Video Ebola Vaccine Trials Underway in West Africa

Ebola has claimed the lives of more than 10,000 people in West Africa. Since last summer, researchers have rushed to get anti-Ebola vaccines into clinical trials. While it's too early to say that any of the potential vaccines work, some scientists say they are seeing strong results from some of the studies. VOA's Carol Pearson reports.
Video

Video Philippines Wants Tourists Spending Money at New Casinos

Tourism is a multi-billion dollar industry in the Philippines. Close to five million foreign visitors traveled there last year, perhaps lured by the country’s tropical beaches. But Jason Strother reports from Manila that the country hopes to entice more travelers to stay indoors and spend money inside new casinos.
Video

Video Civilian Casualties Push Men to Join Rebels in Ukraine

The continued fighting in eastern Ukraine and the shelling of civilian neighborhoods seem to be pushing more men to join the separatist fighters. Many of the new recruits are residents of Ukraine made bitter by new grievances, as well as old. VOA's Patrick Wells reports.
Video

Video Islamic State Prisoners Talk of Curiosity, God, Regret

Islamic State fighter, a prisoner of Kurdish YPG forces, asked his family asking for forgiveness: "I destroyed myself and I destroyed them along with me." The Syrian youth was one of two detainees who spoke to VOA’s Kurdish Service about the path they chose; their names have been changed and identifying details obscured. VOA's Zana Omer reports.
Video

Video Germanwings Findings Raise Issue of Psychological Testing for Pilots

More is being discovered about the co-pilot in the crash of Germanwings Flight 9525 in the French Alps. Investigators say he was hiding a medical condition, raising questions about the mental qualifications of pilots. VOA's Carolyn Presutti reports.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.

VOA Blogs

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More