May 15, 2021
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'Cash Transfers Are A Cure, But Not A Cure-All'

'Cash Transfers Are A Cure, But Not A Cure-All'

Lant Pritchett and Shrayana Bhattacharya succinctly sum up the recent debate about Cash Transfers in the Indian Express: Cash is no Cure:

If the problem is that people who are eligible find it hard to procure paperwork to prove their citizenship and poverty to make claims on state resources, while those who are ineligible nevertheless manage to get benefits, it is hard to see how moving to cash helps...

Cash transfers are terrific at what cash transfers are terrific at — a pure and direct transfer of purchasing power. If the goal of transferring resources to citizens is simply to attain a socially desirable distribution of money and ability to buy things, cash works very well. However, if the idea is to tackle market failures and attain a socially desirable form of behaviour, where administrators allocate benefits to the poorest and the poorest are able to use the subsidy amounts for good nutrition and health outcomes, the idea of cash as a cure-all is problematic. Much of the current discussion on cash transfers is focused on what the state ought to do, without enough consideration of what the Indian state is capable of doing. Proponents of a cash-based approach assume the state has better ability to supply cash than the supply of physical goods. However, cash transfers leave many of the hard problems in implementing social programmes in India just as hard, if not harder.

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