Cash Transfer Schemes for Women in Maharashtra and Odisha

A recent paper by members of the Economic Advisory Council to the Prime Minister (EAC-PM) highlights the impact of cash transfer schemes for women in Maharashtra and Odisha, suggesting their continuation and periodic review.

Key Findings

• The schemes increased expenditure significantly: 
  • Maharashtra: 46% rise in expenditure
  • Odisha: 28% rise in expenditure
• The spending on lifestyle, medical, and educational purposes increased, indicating qualitatively welfare-improving outcomes.
• For every Rs 100 transferred, Rs 90 was spent.
• Older women saved more, while those with lower education prioritized spending on education.
• Positive household spillover effects were observed: 
  • Odisha: 10% rise in account balances led to a 1.9% decline in relatives’ spending.
  • Maharashtra: 23% rise in relatives' balances and a 49% decrease in their spending.
• The adoption of digital payments, especially UPI, increased significantly post-transfer.

Program Details

• Maharashtra’s Mukhyamantri Majhi Ladki Bahin Yojana: Monthly transfer of Rs 1,500 to eligible women.
• Odisha’s Subhadra Yojana: Biannual instalments totalling Rs 10,000 per year.

Recommendations

• Continue and evolve programs to include capacity-building, digital literacy, and SHG linkage components.
• Review transfer amounts periodically to ensure adequacy in light of inflation and household spending patterns.

Concerns and Economic Context

• 12 states are projected to spend Rs 1.68 lakh crore on cash transfers to women by 2025-26.
• Concerns about the financial health of state governments due to elevated debt levels: 
  • General government debt is a key weakness in India's public finances.
  • States are encouraged to reduce debt to pave the way for investment and growth.
• While welfare programs are essential, they risk crowding out critical infrastructure investments.

Economists argue that despite financial concerns, small and targeted cash transfers to women can significantly improve household well-being, security, education, and savings.