Delhi's Mahila Samman Yojna, Cash Transfer Policy

Delhi’s Mahila Samman Yojna, Cash Transfer Policy

The controversy over AAP's cash transfer promises (Delhi's Mahila Samman Yojna) ahead of the Delhi elections prompts a debate on whether such schemes represent genuine welfare initiatives or are driven by short-term transactional politics.

What are the Arguments For and Against the Cash Transfer Policy?

Aspect	Arguments For	Arguments Against
Fiscal Impact	● Provides immediate financial relief to vulnerable populations. ● Boosts purchasing power and stimulates local economies.	● Imposes a significant fiscal burden, diverting funds from long-term investments like infrastructure and healthcare. ● May lead to underfunding of critical public services like education and sanitation.
Dependency	Acts as a safety net for households without stable incomes.	● Risks creating a culture of dependency, discouraging employment and entrepreneurial efforts. ● May undermine work ethic and skill development.
Inflationary Pressures	Increases demand, potentially spurring economic growth.	Could lead to localized inflation and erode the purchasing power of cash transfers.
Addressing Socio-Economic Issues	● Directly tackles immediate challenges like poverty and unemployment. ● Promotes social equity by targeting marginalized groups.	● Offers short-term relief but fails to address structural issues like lack of quality education or job creation. ● May oversimplify complex socio-economic problems requiring deeper policy interventions.
Risk of Misuse	Empirical evidence shows recipients typically spend transfers on essentials like nutrition and education.	● Unconditional transfers might be misused on non-essentials or harmful activities (e.g., alcohol, gambling). ● Risk of inefficiency in implementation or beneficiary identification.
Electoral and Political Impact	● Demonstrates responsiveness to public needs and fulfills electoral promises. ● Enhances political legitimacy and accountability.	● Often introduced close to elections, seen as populist measures aimed at securing votes. ● Focus on short-term political gains over long-term stability and growth.
Equity	● Helps build financial independence for women, promoting gender equality. ● Supports inclusive growth for marginalized and disadvantaged communities.	● Unconditional transfers might not be targeted effectively, benefitting non-deserving individuals. ● Universal schemes risk spreading resources too thin to make a substantial impact.
Economic Opportunity Costs	Provides immediate economic stimulus by boosting consumption.	Diverts resources from alternative investments with higher long-term returns, like skill development.
Sustainability	● Leverages existing digital infrastructure for efficient implementation (e.g., DBT). ● Ensures transparency and minimizes leakages by bypassing middlemen.	● Poses long-term sustainability issues without clear exit strategies or sustainable revenue sources. ● May lead to socio-political backlash if phased out.