Cash transfers as a social policy instrument

Content

  1. Introduction
  2. How effective is cash transfer as an instrument of social protection
  3. Key criticisms against cash transfer programmes
  4. Some conditional cash transfer schemes in india
  5. Some conditional cash transfer schemes in india
  6. Summary

Introduction

Variable and insufficient income is an important cause of poverty. Cash transfer programs involving simple and reliable income flow to individuals and households reduce this variability. This protects household consumption by allowing them to spend on important requirements such as food, school, and health care in lean time. Cash transfer can also protect households from selling assets or entering debt in difficult times. In the long run the program can allow households to build 'human capital'. Human capital is intangible knowledge, skills, experience, and wisdom, marked as a type of 'wealth' found in individuals, groups in the chosen population.

Thus Cash Program Transfer In general, contributes to social assistance and the formation of human resources.

 Conditional Cash Transfer (CCT) is a group of public cash transfer programs. CCT specific objectives can reduce bepoversion, redistribution of wealth and income, income income to the life cycle and handle certain risks. Both conditional and unconditional cash transfer is useful for overcoming social risks and difficulties identified as support for elderly scholarships or education for children from less favorable situations. Cash transfer coupled with instruments and other social policy strategies can be effective. Some prerequisites such as efficient public services and financial inclusion may be needed for successful cash transfer. CCT may be very different in terms of program design, area or population covered and the context of implementation that produces a variety of results

How effective is cash transfer as an instrument of social protection

Effective cash transfer programs meet the prevention, promotion and transformation of social protection. This must reduce vulnerability (reducing the number of people who fall into poverty/have fallen deeper into poverty. Furthermore, it must reduce chronic poverty by increasing the income of the poor and increasing their choice to work outside of cash transfer poverty has been carried out has been held has been carried out by poverty. Emerged quickly as a social protection instrument for the governments of middle -income countries - Mexico, Brazil, China, South Africa, Indonesia.

Latin American experience is most often quoted. But the reasons for CCT are different in each country. Although public cash transfer is a standardized policy, different goals can form a level of design, scope, duration, targeting, requirements and punishment for non -compliance

For example, Bolsa Familia Brazil is formed by the principle of universalism, minimum revenue guarantees and general public services (10% of the monthly income of the recipient). On the other hand, MEXICAN's progression/opportunidades promote the accumulation of human resources by expanding health services and education among low -income families (20% HH expenditure). In Chile, Solidario is targeted for very vulnerable people expelled from existing safety nets. 

In Colombia, the Familias EN ACCION defines vulnerable groups that are influenced by specific side effects. It is important to also see the proportion of the population covered by cash transfer programs and therefore offers social protection. In Brazil, 26%, in Mexico 15%, in Chile 6%, in Colombia 5%and in Nicaragua, 3%of the population was given protection through conditional cash transfer programs. 

Some supporters of the cash transfer program view unconditional universal cash transfer as a very decent social policy that has the potential to reduce increasing social inequality in liberalized economies (Standing 2012: 65). The universal cash transfer program, according to this commentator, will eliminate the problem of leakage, bureaucratic wisdom in shipping subsidies and benefits and provide more agencies to the poor themselves to make rational choices about (Ibid: 65). The availability of cash among the poor will increase access and quality of public services (IBID). Among the positive results documented from the cash transfer program are included, raising the living standards of the poor, reducing poverty, hunger and inequality and helping the household to maintain and improve the livelihoods in the face of surprises. In many cases it improves the quality and quantity of household food consumption. This also allows the use of health services and better education by vulnerable population groups. However, whether cash transfer can reduce poverty depending on various factors such as the event and depth of poverty. 

Transfer must also reach those who need it. The scale and cash transfer value must match the population or groups in need in a certain context. Program duration, targeting methodology, other initiatives and public services and household capabilities to take advantage of transfer forming other important factors. Recent success in the cash transfer program in Brazil (Bolsa Familia) and Mexico (Opportunidades) must be seen in the context where cash transfer has been supported by a number of existing public systems for shipping, health care, nutrition, and education. Some of these systems have also developed during this period. Therefore cash transfer must add rather than replacing the delivery of public goods and services

Bolsa Familia from Brazil which is based on the presence of a minimum school and children's immunization is possible to be applied only because there are quite a lot of schools with good quality that provides free education. Therefore, previous and ongoing investment in schools and good quality education is needed to make Bolsa Familia work. Programs that require a mandatory presence in a health clinic requires health care services that can be accessed and affordable based on public health expenses

The sustainability of the social protection program also depends on the availability of financing sources and political will to create these sources. The government can use various strategies to increase resources to finance cash transfer programs. This can include the allocation of back funds in the existing national budget such as re -directing funds from less efficient social protection schemes. The government can increase more income by increasing taxation levels or economic growth. This can also get external assistance for cash transfer programs through loans and assistance. Latin American countries provide a successful model for what is known as the first generation CCT. There is no guarantee that this model -MODEL will be imitated or succeeded in a very different context

Key criticisms against cash transfer programmes

In order to be effective, cash transfer must be guaranteed, easily sent and monitored and large enough to affect household income. Therefore CCT can take a very large part of public expenditure.
But what form of public expenditure will be replaced? This is not considered a very effective strategy in the time when the price of food and other important goods and services increases.

Other criticisms include difficulties in creating models that can be imitated in various contexts of the country despite the appearance of standard uniformity. In many middle and low income countries, especially in rural areas there are problems related to supply such as not enough school, classrooms or teachers to provide education. Cash transfer programs can rarely make curves in poverty that are constantly because they do not discuss the causes of poverty. Poverty reduction requires structural changes.
 Choosing the right beneficiary may be important for the success of a conditional cash transfer program. In addition, the amount of transfer must be sufficient to offset the price increase of some newly degraded goods.

Revision of frequent transfer of transfer to overcome inflation in food prices may not be feasible in all contexts that result in reduced program utilities. In some context, the poorer may prefer the provisions. If cash receipts are spent in other household priorities (not important), then their purpose may not be fulfilled. The possibility of exception and inclusion errors will also reduce the benefits of the program

Adequate administrative mechanisms are needed to continue to monitor whether the status of household food safety changes. Cash transfer cannot replace a number of public policy and intervention steps such as food subsidies and fertilizers and maintain stock buffer in the Indian context. also much easier to divert cash than the provision of social services or physical good

Cash transfer is associated with certain school children in the household. The amount received by the increase with each new level of education achieved. At the middle school level, the amount received by girls is higher than those received by boys. The attendance rate of children's schools must be 85% to receive a grant. Non-foster causes a grant to be taken. This, OPPORTUNIDADES provides incentives to the household because they send their children to school and keep it there.

The problematic point of view is a position that CCT can replace public services by allowing recipients to buy health and education services from private providers. This is not the way CCT works, say, Brazil or Mexico. In Latin America, CCT is usually seen as a complement, not a substitute, for the provision of public health, education and other basic services. Incentives work because the service is in the first place. In India, this basic service is still missing mostly, and CCT is not a substitute

Changing the transfer in-kind from subsidized food granules through a public distribution system with cash transfer is being debated in India. (See Module About Food Security) In 2015 a pilot project began in three union regions: Chandigarh, Dadra and Nagar Haveli and Puducherry to replace the transfers of PDS grains to people under poverty lines of people with cash transfer using DBT. Project evaluation found that less than 60 percent of cash actually reached beneficiaries.

 In addition, additional expenses borne by beneficiaries to access banking services reduce the number of subsidies provided to beneficiaries. Therefore cash transfer is not always more efficient, fair or responsible than the transfer in the form of goods

Some conditional cash transfer schemes in india

JANANI SURAKSHA YOJANA (JSY)

Janani Suraksha Yojana (JSY) is a conditional cash transfer program introduced in 2005 under the national health mission program and targets pregnant women to promote childbirth in hospitals. Institutional delivery is being promoted to reduce the high mortality rate of neo-Christmas and mothers. This scheme offers cash incentives to women because they give birth in public or accredited private hospitals. Special cash incentives are given to public health workers (Asha accredited social health activists) to promote births in hospitals. Based on the institutional birth rate, Indian countries are divided into low -performance countries (LPS) and high -performance states (HPS). 2014-15, 10.4 million beneficiaries receive cash transfer under JSY's study. health service providers, lack of transportation and obstacles related to the socio-cultural context faced by women in accessing hospital care (Ibid). who meet the requirements will receive the cash transfer directly in his bank account. (For DBT-see the next part

NATIONAL SOCIAL ASSISTANCE PROGRAMME (NSAP)

The National Social Assistance Program (NSAP) consists of five non-conditional cash transfers for parents (Ignoaps), Widow Widows (IGNWPS), disabled people (IGNDPS) and families about the death of the Bread-Winning Benefits Scheme (NBS) through a cash transfer program Non-conditional targeted and Annapurna (in the type of transfer of food granules to poor elderly who are not borne by NOAPS).
Introduced in 1996, the aim of NSAP is to protect the poorer from the adverse effects of 'inappropriate desires' resulting from 'unemployment, old age, defects, death of breadwinners, pregnancy and disease'. NSAP, initially included, retirement for old age and benefits for childbirth and one transfer to the family with the breadwinner of the deceased - retirement for widows and disabled people was introduced in 2009. The benefits are disbursed through banks and post accounts from people who meet the requirements and post money parties and in public meetings in the region or environment. All state governments have the flexibility to change the condition of the feasibility and the amount of transfer. Efforts are being made to convert CCT under NSAP to transfer direct benefits (see entry below in DBT).

DIRECT BENEFIT TRANSFER SCHEME IN INDIA

The direct benefit transfer scheme in India was introduced in the 2011-12 financial year.
Through this program, the government plans to transfer a number of subsidies and other forms of cash through their private bank accounts. In 2013, the transfer scheme of the benefits was directly launched in 20 districts and covered 7 welfare schemes. But food, fuel, and fertilizer are not included in this transfer (Ibid). Far, the government has transferred subsidies related to kerosene, fertilizer and LPG (Liquid Oil Gas) as cash directly into the bank account of beneficiary. beneficiaries. DBT Scheme IS is a beneficiary based on financial inclusion and all recipients will need access to a bank account and a unique proof of identity. The money is transferred to the beneficiary bank account that has an AADHAR card.

All citizens can get AADHAR cards, which carry unique identification numbers based on demographic and biometric information. After various types of subsidies and other welfare benefits are paid to a bank account, beneficiaries can use cash to buy goods and services from the market. It is said that Aadhar's activated bank account will allow beneficiaries to receive some welfare payments in one place (Ibid). One of the main challenges in achieving DBT is the lack of access to the poor to the bank. Bank regulations and requirements must be greatly reduced and the banking network is quite expanded in rural and remote areas for beneficiaries who meet the requirements to open, maintain, and use banking services to utilize the benefits of social welfare

In November 2014 the government launched the direct transfer of benefit for the LPG cooking gas subsidy under the PAHAL scheme in 54 districts. The scheme was launched in the rest of the country by January 2015. The cooking gas subsidy was directly transferred into the bank accounts of beneficiaries. To obtain the subsidy the consumer/beneficiary has to link their Aadhar number in the LPG database with the bank. Consumers joining the scheme are called CTC or ‘Cash Transfer Compliant’. One of the main objectives of the scheme was to curb the diversion of subsidized LPG that cost 50 percent less than market price and meant for domestic use, for commercial purposes.According to government sources, the scheme led to substantial annual savings of an estimated Rs.22000 crores from 2014-16. Some commentators have disputed the claim by attributing the savings to low global prices of LPG import (ibid).  In early 2016 the government announced the inclusion of kerosene subsidy under the DBT scheme. At the outset, 8 states (Chhattisgarh, Haryana, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Punjab, and Rajasthan) have proposed to implement Kerosene subsidy as DBT in a total of 26 districts. The beneficiaries would have to pay the full price during the purchase of kerosene at first. Later, the subsidy amount will be transferred to their bank account as cash (ibid). Poorer households primarily use kerosene as lighting and cooking fuel.

Among the anticipated positive effects of the DBT scheme is to improve the efficiency of delivery of welfare benefits to eligible persons, reducing losses through diversion of benefits through corruption and fraudulent documents, enable financial- inclusion and reduce the burden of subsidy on the public exchequer

Explaining Fertilizer Subsidy

The aim of the fertilizer subsidy has been to promote agricultural productivity by making chemical fertilizers available to farmers at an affordable price. The subsidy, at present, is available for different types of fertilizers as followed: urea a fully government controlled productis sold at statutory notified uniform sale price, and decontrolled Phosphatic and Potassic fertilizes are sold at indicative maximum retail prices (MRPs).

The subsidy on fertilizer is not given directly to farmers but transferred to manufacturers to compensate them and allowing them to earn a return for selling the product to farmers at a price controlled by the government. The subsidy is currently provided to the manufacturers under two schemes: The New Pricing Scheme for Urea units and the concession Scheme for decontrolled Phosphatic and Potassic fertilizers. The amount of subsidy is calculated as the difference between the cost of production and the selling price/MRP of the fertilizers. At present this subsidy principle is extended to both indigenously manufactured as well as imported fertilizers (ibid).The government aims to convert the fertilizer subsidy to DBT scheme from June 2017. In this case, the fertilizer companies have to record the sale of fertilizers to farmers through point-of-sale (POS) machines installed at the retail level. The subsidy payment will be based on settling claims weekly drawing on POS sales data. Described as the ‘subsidy-post-sale’ system, the scheme is being piloted in 17 districts at present

Summary

Cash transfer programmes involve modest and reliable flow of income to individuals and households to protect household consumption of essential requirements such as food, school and healthcare in lean periods. Cash transfers may also protect households from selling assets or getting into debts in difficult times. In the long run the programme may enable households to build ‘human capital’.Conditional Cash transfer (CCT) is a sub-group of public cash transfer programmes. Specific objectives of CCT could bepoverty reduction, redistribution of wealth and income, income smoothing over life cycle and addressing specific risks.Like other social policy instruments, CT and CCT require some basic preconditions for success.Sustainability of social protection programmes is dependent on availability of sources of financing and political will to create these sources. Governments may re-allocate funds from other social protection schemes or public services. CT or CCT however should work in combination with other public intervention for better outcomes. In addition to social assistance, cash transfers are being used in India to reform/reduce existing subsidies on food and fertilizer. The Direct Benefit Transfer (DBT) is being used to remodel subsidies as targeted cash transfers directly to beneficiary bank accounts based on Aadhar, a unique identity number. DBT has the additional goal of financial inclusion linked to efficient and equitable access to banking services.

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