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.
TEXT SIZE - +
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

Multimedia Relatives of South Korean Ferry Victims Fire at Authorities

46 people are confirmed dead, but some 250 remain trapped inside sunken ferry More

War Legacy Haunts Vietnam, US Relations

$84 million project aims to clean up soil contaminated by Agent Orange More

Wikipedia Proves Useful for Tracking Flu

Technique gave better results than Center for Disease Control (CDC) and Google’s Flu Trends More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid