As 128 children died of encephalitis in Bihar over 19 days in June, a new study reports that the state’s rural population prefers government investment in public healthcare over roads, jobs and cash transfers.

The survey was conducted by an American research group, the Brookings Institution in an administrative block of Bihar. Three thousand and eight hundred respondents – comprising the poor, the less-educated and disadvantaged caste groups – were asked to make a choice: an incremental and hypothetical budget for their block to be transferred directly to them as direct cash transfers, or budgetary allocations for better welfare services.

Only 13% wanted the funds to come their way via direct cash transfer. The majority 86% wanted it to be invested in public healthcare. The remaining 1% had no opinion on the matter. Approximately 63% of respondents wanted the budget to be spent on new roads rather than the direct cash transfer scheme, the study found.

Investment in public health was preferred to job creation programmes by 73% respondents and to road building by 79% of respondents.

“It would appear from these responses that some of the poorest citizens of one of the most economically underdeveloped parts of India prioritise public health well above job creation programmes and roads, with cash coming last,” said Stuti Khemani, one of the report’s co-authors and a senior economist at the World Bank’s Development Research Group.

Direct Benefit Transfer Scheme

The central government launched the Direct Benefit Transfer programme on January 1, 2013, with the aim of “reforming the government delivery system by re-engineering existing processes in welfare schemes for simpler and faster flow of information/funds and to ensure accurate targeting of the beneficiaries, de-duplication and reduction of fraud”.

This flow of funds to the public takes place through two modes, cash or kind. During 2018-’19, an estimated Rs 2,14,092 crore was transferred to approximately 59 crore beneficiaries in the country and accounted for 65% of the total direct benefit transfer provided by the central government.

Bihar received a cumulative cash benefit of Rs 1,627 crore, less than 1% of the all-India figure, data shows, though it is home to almost one-tenth of India’s total population.

In addition to this, Bihar was identified by researchers as “one of India’s poorest states’’, with a per capita net state domestic product of only Rs 28,485 – the lowest among all 29 states and equivalent to the per capita GDP of civil war-ridden Central African Republic.

Cash benefits or public services?

As we mentioned earlier, the survey presented respondents with trade-offs between direct cash transfer and two other social obligations of the government – public health and new roads, to be funded by a hypothetical budget.

To improve the perspective, a second set of trade-offs was offered: Public health versus job creation programmes and public health versus new roads in the block.

Why was it important to elicit the beneficiary response to an imagined trade-off?

The researchers wanted to show how “other types of public goods and services on which the poor may rely would suffer as a direct consequence of a cash transfer scheme – both because of the fiscal cost of the scheme as well as the limited implementation capacity of state governments in India”, as another 2019 World Bank report authored by Khemani illustrated.

It could be that “policies that provide targeted private benefits, such as cash transfers in poor countries, may have inadvertent consequences by fueling that game at the expense of broader public services like in public health”, Khemani wrote in a blog.

Public health priorities

As we said, participants showed an overwhelmingly low preference for cash through direct benefit transfer when they were offered alternative avenues for funds use – roads and health, with the latter, picked over both road construction and employment generation.

“People’s preferences, at the very least, would depend upon their views of how the state has performed in the past,” said Khemani. “It could be, for example, that precisely because the state has not performed well in implementing large, targeted poverty alleviation programmes in the past, people are now expressing support for broader kinds of public services such as public health.”

Inadequate funding of just 2% of the 2018-’19 interim budget has left India’s public healthcare sector in a bad shape, forcing patients to visit private health facilities. This out-of-pocket expenditure increased by 16% between 2014 and 2016, according to data from the World Health Organization, IndiaSpend reported in January 2019.

In 2011-’12, as per this July 2018 IndiaSpend report, 5.5 crore Indians were pushed into poverty by out-of-pocket health expenses. The central government was likely to increase the allocation of resources for primary and secondary healthcare at the cost of tertiary care, the 2019 IndiaSpend report said.

Bihar’s delayed and inadequate response to the fatal outbreak of encephalitis among children since the start of June 2019 could explain public anxiety about the state’s crumbling health infrastructure. Encephalitis was first identified in Muzaffarpur in 1995 and now strikes the city with clockwork precision, The Wire reported. Despite this, the state has been unable to deal with the annual health threat.

Khemani is of the view that the poor find it difficult to put cash transfers to use in the absence of a bankable public health system. “They rely on state-funded community health workers for preventive care and promotive outreach during pregnancy and for their young children,” she said. “But these community health workers seem to be severely under-resourced, perhaps explaining why respondents are answering that any additional budget should be allocated to them.”

Khemani also attributed the low preference for jobs against healthcare to the relative failure of the Mahatma Gandhi National Rural Employment Guarantee Scheme – the largest rural-jobs guarantee initiative of its kind in the world – in Bihar. Only 21% of rural households in the state who wanted to benefit from this scheme were able to. This was notably lower than the all-India average of 66%, a 2018 study found.

What local leaders say

The survey did not find any noteworthy demand for cash transfers among block leaders either. Around 35% of village-level politicians – panchayat ward members, mukhiyas or village heads and former candidates for the mukhiya’s position – cited the “maintenance of social harmony” as the most pressing issue they had to deal with, the study found.

“Maybe, injecting cash into this environment could have unintended consequences of stirring social conflict,” said Khemani.

There were also no major variations in the choices listed by reserved sections – such as scheduled castes, scheduled tribes and other backward castes eligible for affirmative action through reservations in educational institutes and government jobs – and general non-reserved categories.

Cash should not be treated as a poverty killer as many policymakers do when planning uplift programmes for the poor, Khemani concluded in a follow-up blog. “Injecting cash may be akin to giving Tylenol to help the symptoms of a fever,” she said. “It can help but needs to be administered cautiously and in controlled amounts.”

This article first appeared on IndiaSpend, a data-driven and public-interest journalism non-profit.