Context:

• Cash transfers have become a regular feature of Indian politics, in the form of free electricity, free bus travel, monthly payments to women, subsidised food and utility subsidies.
• Experts argue that governments attach lofty purposes such as dignity and empowerment to these schemes but rarely publish the evidence linking payments to outcomes. They call for rigorous accountability before and after rollout.
• This article highlights the growing role of cash transfers in Indian politics, their expanding fiscal footprint, the evidence gap surrounding their outcomes, and the need for stronger accountability.

The Speenhamland Lesson

• In May 1795, English magistrates met at the Pelican Inn in Speenhamland, Berkshire.
• With food prices rising and the French Revolution unsettling the establishment, they decided to top up agricultural wages from parish funds, linking payouts to bread prices and family size.
• Hungarian economic historian Karl Polanyi later saw this as an early assertion of a human "right to live" against the harshness of the market. Critics disagreed.
• Once wage support, poor relief and public finance were merged into one instrument, it became unclear what the system was protecting: poor families, the wage structure, employers or social peace.
• Subsidising wages from public funds blurred price signals and weakened incentives.
• Analysts draw a clear lesson: relief may be justified, but the instrument must still be judged by its effects. India's dole politics must face the same test.

Why Cash Support Matters in India?

• Cash transfers can be essential in a poor, informal economy. The Economic Survey 2025-26 notes that transfers to women amount to:
  • 11–24 per cent of the monthly income of women daily-wage workers;
  • 11–87 per cent of the income of self-employed women.
• However, a transfer that begins as relief can become a permanent fiscal commitment unless there is a clear account of who receives it, what it changes and what it displaces.

The Growing Fiscal Footprint

• Dole politics now stakes major claims on State finances. According to PRS Legislative Research:
  • Unconditional cash transfers to women expanded from two States in 2022-23 to 12 States in 2025-26.
  • The estimated annual cost is Rs 1.68 lakh crore, about 0.5 per cent of GDP.
• State-level examples:
  • West Bengal has moved from Lakshmir Bhandar to Annapurna Yojana, budgeting Rs 36,000 crore for a Rs 3,000 monthly transfer to about 1.3 crore women.
  • Tamil Nadu allocated Rs 14,412 crore for the Kalaignar Magalir Urimai Thogai in its 2026-27 interim budget.
  • Assam set aside Rs 5,000 crore for Orunodoi.

Cash Cannot Replace Public Goods

• Cash may improve welfare, but it should not substitute for the public goods that make welfare durable.
• The same woman who values Rs 1,500–3,000 a month also needs a functioning health centre, childcare, a good government school and access to better work.
• A cash transfer may soften the strain caused by weak institutions, but it cannot fix them.

The Missing Evidence

• Governments rarely publish the model that connects payments to outcomes. Key unanswered questions include:
  • Who exactly is being targeted?
  • What baseline data justifies the scheme?
  • What effect is expected on consumption, debt, nutrition, schooling, health spending, labour supply or women's bargaining power?
• Without such answers, dole politics is defended by the moral language of welfare rather than evidence.
• An ADB study prepared for the 16th Finance Commission found that India lacks a systematic dataset of government expenditure on cash-transfer schemes.

Learning from Other Democracies

• Other democracies also redistribute and face welfare politics. But benefits such as unemployment insurance, food support and healthcare subsidies are usually tied to eligibility rules, contribution records, job-search obligations or periodic reassessment.
• India need not copy these mechanically. Some transfers, especially to women in poor households, may be better left unconditional.

A Framework for Accountability

• Experts propose a two-stage evidence framework for any large recurring transfer:
  • Before rollout: a welfare impact statement covering
    • Objective and eligibility rule
    • Expected coverage
    • Five-year fiscal cost
    • Alternatives considered
    • Likely leakage and exclusion errors
    • Measurable outcomes
  • After rollout: household surveys recording not just receipt of the transfer but its effects on
    • Consumption and debt
    • Health spending and schooling
    • Mobility and work incentives
    • Control over household expenditure
    • Subjective well-being
• Anonymised microdata should then be released for independent research. Schemes spending public money at this scale must survive severe scrutiny.

Conclusion

• Cash transfers have real value in India's informal economy, but they are fast becoming permanent fiscal commitments without evidence of impact.
• Welfare impact statements, post-rollout surveys and open data would not remove politics from welfare, but would make it more honest. Evidence is ultimately a matter of democratic fairness.