Cash transfer can be counterproductive 

Cash transfer can be counterproductive 
Highlights

Both the ruling BJP and the Opposition Congress are vying with each other announcing separate income redistribution plans ahead of the general elections While the Congress has promised a Minimum Income Guarantee Scheme MIGS, the BJP announced a basic income plan for farmers Pradhan Mantri Kisan Samman Nidhi PMKSN in the interim budget

Both the ruling BJP and the Opposition Congress are vying with each other announcing separate income redistribution plans ahead of the general elections. While the Congress has promised a Minimum Income Guarantee Scheme (MIGS), the BJP announced a basic income plan for farmers Pradhan Mantri Kisan Samman Nidhi (PMKSN) in the interim budget.

While both schemes may address certain aspects of inequality by ensuring a basic income, they will not eradicate poverty. Poverty is measured as deficits in income or consumption, but the underlying causes of these shortages are linked to human capabilities and access to resources. As poverty is rooted in deficient capabilities, any income support scheme can at best be a welcome addition. It is not sufficient to deal with structural conditions, which lead to inter-generational poverty in diverse social groups.

Under the PMKSN scheme, farmers (who have below two hectares of land) will receive Rs 6,000 per year. But this amount is insufficient even to buy basic farm inputs. In fact, the Telangana and Odisha governments have initiated far more comprehensive income support plans for farmers.

Several studies have shown that a cash transfer scheme such as MIGS or PMKSN cannot be substituted for subsidies and other institutional support systems such as the National Food Security Act-powered public distribution system. In fact, such cash transfer schemes could be counterproductive and may lead to more distress.

Shruthi Rao, BHEL, Hyderabad

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