On the money

The UPA is banking on cash transfers as a political tool, but it must concentrate on programme design

The Congress has been congratulating itself on its newly announced direct cash transfer scheme P. Chidambaram described it as a game-changer, Sonia Gandhi declared it nothing short of revolutionary, and Rahul Gandhi reportedly claimed that "Aapka Paisa, Aapke Haath" would bring the party generous political dividends. The Congress may have been encouraged by studies suggesting that beneficiaries of cash transfers in other countries tend to think better of the incumbent party, and vote accordingly. The BJP finds it difficult to frontally attack the idea, given it was once part of their election manifesto, but it has also decried the Congress's bid for "political mileage". The Election Commission also clearly considers it an election gambit, given that it ordered the UPA to put brakes on the programme in the districts of Gujarat that were set to vote. In other words, the direct cash transfer scheme is clearly being viewed as electoral magic potion, by the ruling coalition as well as everyone else.

That said, the transition to cash transfers is too important to be rushed through between various elections. It needs to be disinterestedly considered and methodically tested, rather than left to political capture. After all, this scheme will crucially test the capacities of the state. As the bulk of social spending shifts to direct electronic payments, the government will have to work out whether it will go to households or individuals, whether riders should be built in to motivate certain choices, and whether it will be targeted or universal. If targeted, it will have much greater groundwork ahead, in terms of deciding who qualifies, and on what basis. It will be the first major trial of Aadhaar, and it will also depend on a reliable financial services network. Right now, the focus should be on optimal design, and the cash transfer scheme should use the learnings of various experiments to achieve its ends. The Delhi government's "Annashree Yojana", its food security scheme to supplement the PDS, is going to be channelled through the women of the family the assumption being they make more responsible spending choices. The cash transfer scheme should learn from its experience. As the scheme expands across the country and enfolds more social benefits, the government must stay nimble, allow for the specific needs of different contexts.

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