Nyay’s author admits: Nyay’s gone wild, can sink nation ship, rich will escape, poor will drown

Feminists and social scientists support unconditional cash transfers for its power to liberate and empower women, especially in underdeveloped countries. Economists believe it can boost consumption demand and help stimulate the larger economy. Efficiency hunters find cash transfers appealing for their simplicity and efficiency of governance. Libertarians like it because of the freedom it provides to the individual family unit in making spending decisions. But we do not yet know how many of these promised benefits of cash transfers to women have been fulfilled in India. While some studies such as the Pratichi Trust’s assessment of Bengal’s cash transfer scheme report some encouraging findings, they lack rigour and neutrality. The truth is that it is still too early to assess the real impact of $25 billion a year “NYAY” type programmes on social development and women’s empowerment.

But it is obvious that the idea has gained enormous political currency, with nearly every political party promising it in their election manifestos. However, there is no empirical or scientific evidence that cash transfers to women, either as a scheme by a ruling party or as a promise by an opposition party, have material impact on influencing voter behaviour. The Congress party promised the largest cash transfer for women in 2019 and even made it its core election plank, but lost. Similarly, in the recent Maharashtra elections where contrary to media punditry, there was no difference in voting behaviour between beneficiaries and non-beneficiaries of the ruling BJP alliance’s cash transfer to women scheme. The Congress alliance’s promise to significantly increase the cash transfer amount too didn’t strike a chord with women voters in Maharashtra.

Noisy rhetoric aside, cash transfers to women is clearly not the electoral magic bullet that it is made out to be. Yet nearly all political parties in India have pounced on this idea. The Aam Aadmi Party is upping the ante on cash transfers to women for the upcoming Delhi elections and predictably, other parties will follow. NYAY has become the inevitable sapling in India’s electoral landscape that may not attract voters, but its absence can be conspicuous.

These schemes come at a substantial cost, politically and financially. Cash transfers subvert the very essence of politics in terms of representing people, understanding their real issues and solving them with specific policies and programmes. If all it takes to govern is to throw money at people and let them address their needs themselves, it hollows out the politics of representative governance, as Ruchi Gupta pointed out (‘Too much or too little’, IE, December 16).

Most importantly, the financial burden of such cash transfer schemes is large, real and current. Nearly $25 billion is being spent by all state governments combined on cash transfers to women every year, roughly 10 per cent of what each state government earns annually. More worryingly, these schemes have significantly increased the state government’s deficits and debt burdens. Ironically, the rising debt of state governments due to NYAY-type programmes comes back to harm the same poor women beneficiaries through increased prices (inflation) and costlier access to money (interest rates). This is why the 2019 Congress manifesto that proposed NYAY also committed that “it will be funded only through new revenues and rationalisation of current expenditure with a commitment to keeping the fiscal deficit to less than 3 per cent of GDP”. All political parties seem to have borrowed the NYAY idea unconditionally.

So, after five years, $25 billion and 100 million women beneficiaries, the social, economic and even electoral gains of NYAY are still unknown and intangible, while the political and financial costs are known, tangible and large. It is likely that the social benefits of NYAY-type programmes in terms of women empowerment are enormous in the long run. But in the short run, the tangible costs far outweigh the intangible benefits. It is thus prudent to calibrate spending on cash transfers slowly every year rather than expand rapidly in one go. To be clear, this is neither a mea culpa on the NYAY idea nor is it a call for state governments to abandon the scheme. When costs are immediate, but benefits are spread over a long term, it is important to scale slowly and not too fast, be it in physical infrastructure projects such as metros or in social infrastructure projects such as women empowerment. But with the misplaced excitement and belief about cash transfer schemes leading to electoral victories, all political parties are now engaged in a “my NYAY is larger than yours” slugfest. This is a dangerous race to fiscal ruin that can collectively sink the nation ship, only for the rich to escape with their lifeboats while the poor drown helplessly. NYAY can turn into ANYAY for a poor woman, if it is not slowed down.

The writer is chairman, Professionals’ Congress & co-author of the Congress’ 2019 NYAY proposal