Monday, February 16, 2015

What are Conditional and Unconditional Cash Transfers in India

What is cash transfer?

Ans. With more and more Government reforms the subsidies to the poor will be provided by directly linking their bank accounts through Aadhar. This is being done to bypass the middle men who take away much of the money which was meant for the poor. It is being said that in the present method of public distribution system, out of the 100% money that is being assigned for the poor only 27% percent reaches them and the rest 73% percent are siphoned off through illicit means.

Cash transfer are of 2 types –

(a) Conditional cash transfer.
(b) Unconditional cash transfer.

Conditional cash transfer is a practice that is in use all over the World. But its application has several repercussions. For people to avail the leverage of Conditional Cash transfer they will have to give proof that they are making prespecified investments in activities that are beneficial for them and their small childrens. The reason why this condition is being imposed is to ensure that people are not going to waste this money. So for getting Conditional Cash Transfers people will at many times have to produce certificates of their pre specified investments but this type of arrangement is very difficult to implement in India because of evident infrastructural constraints. Conditions most of the time lead to more conditions giving rise to corruption as the primary aim of cash transfer was to remove middle mean but due to impeding requirements of CCT in Indian context, the middle men are to stay though at a different place and in a different form.

Unconditional Cash Transfer are given keeping in mind that people will use the provided money for their own benefit and growth. A prevalent idea of critiques in UCT is that the money provided can be used for wasteful activities like drinking, gambling etc. But still in Indian context UCT are better than CCT because of the underdeveloped nature of tribal and poor pockets, people are looking for opportunities to grow and develop. People now are sending their male and female children to schools and are working hard for giving themselves a good life.

Unfortunately the above cannot be true for all persons but still it will be useful and if applied cautiously will improve the situation gradually.

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