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Indian Food and Welfare Schemes: Scope for Digitization Towards Cash Transfers

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  • Shweta Saini
  • Sameedh Sharma
  • Ashok Gulati
  • Siraj Hussain
  • Joachim von Braun

Abstract

The paper presents a case for a phased rolling out of direct benefits transfer (DBT) for Food in India. By studying all states and Union Territories on three broad parameters: demographics, performance of the existing Public Distribution System (PDS), and current state of banking infrastructure, the paper evaluates their “readiness†for shifting away from the existing physical grain distribution system under PDS to the ICT based DBT where a food subsidy amount (in lieu of PDS grain entitlement) is directly transferred into the Aadhaar-linked bank account of identified beneficiaries. The analysis reveals that all 36 states can implement DBT-food in the next five years i.e. by the year 2022 and this should happen in four phases. The states that are urban, have sufficient open market grain availability, are financially inclusive, and have lesser percentage of poor and malnourished may make the shift almost immediately. For rest, an interim phase of a reformed and IT based PDS system with identity verification of beneficiaries is built-in. In order to make the transition to DBT feasible and successful, the paper recommends improvements and investments by states/UTs into ensuring adequate food grains in the open markets, inclusive banking infrastructure and diverse payment channels, sufficiency of the food subsidy amount and display of leadership and political will to reform the PDS through DBT. This paper argues that DBT has a potential to make way for a system of social security or universal basic income, where every citizen receives income support – the size of which can be adjusted based on his/her needs and vulnerability.

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  • Shweta Saini & Sameedh Sharma & Ashok Gulati & Siraj Hussain & Joachim von Braun, 2017. "Indian Food and Welfare Schemes: Scope for Digitization Towards Cash Transfers," Working Papers id:12033, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:12033
    Note: Institutional Papers
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    References listed on IDEAS

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    1. David Coady & Margaret Grosh & John Hoddinott, 2004. "Targeting of Transfers in Developing Countries : Review of Lessons and Experience," World Bank Publications - Books, The World Bank Group, number 14902.
    2. Jesse M Cunha & Giacomo De Giorgi & Seema Jayachandran, 2019. "The Price Effects of Cash Versus In-Kind Transfers," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(1), pages 240-281.
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    5. Seth R. Gitter & James Manley & Vanya Slavchevska, 2010. "How Effective are Cash Transfer Programs at Improving Nutritional Status?," Working Papers 2010-18, Towson University, Department of Economics, revised Dec 2012.
    6. Khera, Reetika, 2014. "Cash vs. in-kind transfers: Indian data meets theory," Food Policy, Elsevier, vol. 46(C), pages 116-128.
    7. Marta Kozicka & Dr Matthias Kalkuhl & Jan Brockhaus, 2015. "Food Grain Policies in India and Their Implications for Stocks and Fiscal Costs: A Partial Equilibrium Analysis," EcoMod2015 8377, EcoMod.
    8. Ashok Gulati & Shweta Saini, 2021. "Way Forward," India Studies in Business and Economics, in: Ashok Gulati & Ranjana Roy & Shweta Saini (ed.), Revitalizing Indian Agriculture and Boosting Farmer Incomes, edition 1, chapter 0, pages 353-363, Springer.
    9. Johannes Haushofer & Jeremy Shapiro, 2016. "The Short-term Impact of Unconditional Cash Transfers to the Poor: ExperimentalEvidence from Kenya," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(4), pages 1973-2042.
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    1. Marta Kozicka & Regine Weber & Matthias Kalkuhl, 2019. "Cash vs. in-kind transfers: the role of self-targeting in reforming the Indian food subsidy program," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 11(4), pages 915-927, August.

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