05 May 2010

Conditional Cash Transfers in India: Can They Work?

Santosh Mehotra, the Director General of the Institute of Applied Manpower Research in the Indian Planning Commission kindly sent me a paper he has written on Introducing Conditional Cash Transfers in India, which can be found on the IDS Centre for Social Protection web site.

Conditional Cash Transfers (CCTs) are popular in Latin America: cash transfers targeted to low income households, receivable upon keeping children in school and taking them to health clinics. The paper is a frank assessment from a very senior Indian official about the ineffectiveness of many of the current anti-poverty programmes and a positive proposal for change, through the introduction of 5 new CCTs.

The paper highlights 3 key conditions for CCTs to work in India.

* the ability to target households below the poverty line. In India, this capacity is not strong--income levels and income thresholds are widely contested, reflecting a lack of consensus on methodology and underlying political reasons for not establishing that consensus (i.e. the interests of those who would be excluded by accurate below the line poverty targeting).
* a biometric system of identification to ensure those who are targeted actually receive the funds.
* the availability of bank or post office accounts for the unbanked population is needed.

Mehotra argues that these barriers are not as daunting as they may seem. Mehotra reports that a new poverty methodology will be employed in the 2010 census of the rural population, that a new biometric system is likely to be in place by 2012, and that the National Rural Employment Guarantee has created over 80 million new bank or post office accounts. The paper notes that funding is in place for 4 of the 5 CCTs.

The paper does not analyse the political interests behind the current system and whether there is political support for the new CCTs. No doubt this is politically difficult for a member of the Planning Commission. Instead pilots are proposed, presumably to build up buy in from those who purport to speak for low income voters. But there is an underlying sense that these conditions for success are mountainous.

The paper makes me more inclined to think that CCTs in India would be a good thing, but it also makes me suspect they are a long way off from being implemented.

Nevertheless, this paper serves as a well-informed way of initiating a very important debate.

1 comment:

bella bell said...

I think it is viable in some way due to it being very minimal in denomination; even if you set a cap on how much can be transferred or by a core minimum of allocated values. This is a way of sourcing micro-finance whether it be domesticated or international loaning like open a uk bank account to send Rupees.