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 Miami Cubans Divided on New US Policy

While older, more conservative Cuban Americans have promoted anti-Castro political movement for years, younger generations say economically, it is time for change More

2014 Sees Dramatic Uptick in Boko Haram Abductions

Militants suspected in latest mass kidnapping of over 100 people in Gumsuri, Nigeria on Sunday More

Video Cuba Deal Is Major Victory for Pope

Role of Francis hailed throughout US, Latin America - though some Cuban-American Catholics have mixed feelings More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Sudan School Becomes Target of Aerial Attacksi
X
December 19, 2014 12:45 AM
The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Putin Says Russian Economy Will Emerge Stronger

Russian President Vladimir Putin has said his country's sinking economy will not only recover but also become stronger, despite falling oil prices and Western sanctions over Ukraine. VOA's Daniel Schearf reports.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.

All About America

AppleAndroid