The magic of cash transfer

The way this whole issue of cash transfers came about is [that] in 2008 or 2009, the government of Delhi—which was still [led by] Sheila Dikshit at the time—said they’d like to do cash transfers instead of PDS [public distribution system]. Then, there was a big uproar against it. We have about 50,000 members in Delhi. We asked some of our members if they’d prefer to have cash in-hand, or grain. We did a small study among them and found it was 50-50. I was surprised. I thought they’d all say grain. I had a meeting with Sheila Dikshit and said, “Why don’t you do a small study and see if people prefer grain or cash?” She agreed and we did a small study [in Raghubir Nagar in West Delhi] supported by the Delhi government and the UNDP [the United Nations Development Programme.] [The findings of the study were published in May 2012]. It was very small. About 100 people got cash and about 150 continued on grain. [These were all] the same type of households [in terms of their economic status]. It was self-selected—those who wanted cash would get cash. To my surprise, the ones who got cash were happier, in the case studies. Also, in the baseline survey, we found that those who got cash were buying more food and better food than those getting grain. Part of it is because the grain they get [through PDS] is not good grain; they don’t get their full entitlement. With cash, you can choose what you want. So, nutrition had changed for the better. Plus, people find ways of doing things—some would pool money, take an auto rickshaw, go to the grain market, buy [the grains] and come and distribute it. Methods to better use the cash [came up]. Also, many were happy with the cash because we had [transferred] it into the womens’ accounts. A small number said that [earlier, with PDS,] the husbands used to stand in line [to receive the ration] and take the grain and sell it. The other thing they were happy about is that they didn’t have to stand in line [for the ration].

I thought one of the better effects of this [as found in the study] was that in the area where we did it, the [corrupt] ration shops became better behaved. We did this one study and saw that people who got cash were better off.

When we did this study, we faced tremendous opposition—some of it was ideological [from economists and activists] and some of it was from the ration shops [who form part of the PDS delivery system]. I was surprised. We also realised how strong the opposition to it.

Then we did a bigger study but it wasn’t a substitute study [comparing] grain versus cash. This was in MP [Madhya Pradesh’s] villages. If you give people a certain amount of cash—as a basic income—how do they use it? Especially for the poorest families, [the study found that] it sort of has a transformative effect. For the better-off families, it doesn’t have much effect. And the transformative effect, we realised, isn’t just social—better health, food or education—but in economic growth: buying of seeds, fertilisers, pumps, and animals—they bought a lot of animals. With the poorer families, there wasn’t much change in education, but there was change in health and food.

That was a longish reply from Renana Jabhvala (national coordinator of the Self-Employed Women’s Association (SEWA)) to a question posed by the interviewer from the Caravan magazine. Her open-mindedness and willingness to go with on-the-ground evidence on cash transfer is refreshing and heartwarming.

As for the interviewer? Well, why don’t you read it yourself and judge? (ht: Seetha Parthasarathy of ‘Swarajya’)

In the meantime, I read that the evidence for cash transfer even internationally is quite strong. The poor simply do not blow it away as the ‘Liberals’ believe and hence that they know what is best for the poor!

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