direct cash transfer

Watch: Food or cash? 97% of people surveyed in this Jharkhand block had the same answer

Evidence from the ground on how experiments in cash transfers are working – or not.


What happens when the government distributes cash instead of foodgrains? Chaos and disruption, say the residents of Nagri block in Jharkhand’s Ranchi district.

In October 2017, the government launched a pilot project in the block that changed the way families entitled to food rations could access them. Earlier, all they had to do was visit the ration shop to buy subsidised rice for Rs 1 per kg. But with the government now transferring the subsidy in the form of cash into their bank accounts, they had to follow three steps. First, visit the bank to find out whether the money had arrived. Since banks are reluctant to process small amounts, go to the local service centre called pragya kendra to withdraw the money. Finally, queue up at the ration shop to buy the rice priced at Rs 32 per kg.

A survey of 244 families in 13 villages by student volunteers working with the Right to Food campaign showed this process was not only tedious and time-consuming, but also expensive and exclusionary. The average distance from home to the bank was 4.5 km and to the pragya kendra, 4.3 km. The average time spent visiting all three places was 12 hours – or one and a half days of missed work and wages. Even then, there was no guarantee of getting the food rations – on average, the surveyed families received only 2.1 of the four instalments of rations since the pilot began in October 2017. Many people, specially the elderly, had trouble verifying their fingerprints for the Aadhaar-based authentication introduced as part of the process.

No wonder 97% of the respondents said they wanted the government to stop the cash transfers and go back to the earlier system of food distribution.

Among those put to hardship is Jatri Devi who cannot walk without a stick but still has to trudge to her bank every month because she does not have money to pay for an autorickshaw. And Dauri Devi who has not got any ration for five months since her fingerprints are worn out by years of manual labour.

Watch the two women and others recount their struggles in the short film above, shot by Aninjit Pakhale.

The larger push towards cash transfers

Jharkhand is not the only state experimenting with replacing subsidised foodgrains with cash transfers, also called direct benefit transfers. Over the last few years, the Centre has been pushing all states to run such pilot projects, as policy makers argue cash transfers will help eliminate the leakages in the public distribution system.

But studies have shown mixed results. Surveying the first batch of such experiments launched in three Union territories, a report commissioned by the government think-tank Niti Aayog found two-thirds of the beneficiaries supported cash transfers, but one-third had either not received the money or did not know if they had received it.

To avoid welfare losses to the poor, the report recommended that the government implement a choice-based direct benefit transfer system in which beneficiaries would be free to choose whether they wanted benefits in cash or kind. But as the case of Nagri block in Jharkhand shows, this recommendation has been ignored.

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