Cash Transfer or Direct Benefits?

Dr. N. Bhattacharya

Around seven decades of trial and error have taken place since independence on many serious issues affecting the life and livelihood of the people. The Indian ruling class has never attempted seriously to honour its constitutional obligations to the citizens of this country. During the Raj from 1757 to 1947 the British government as a part of the imperialist policies to enrich itself systematically destroyed India’s natural resources and made the vast majority of the people suffer from acute hunger and fatal diseases. The Bengal Famine of 1943 was the result of their imperialist design. Since 1947 till date almost all governments of independent India have never tried honestly to present before the people a credible picture of the social and economic challenges being faced by the masses. Governments have been busy confusing people with different sets of data on ‘poverty’. The Planning Commission officially advertises one set of figures and the government’s policies are framed on this information but the Supreme Court and Parliament are given quite different sets of figures. The recommendations of the Joint Parliamentary Committee on food security agreed to provide food at a subsidised rate to 75 per cent of the rural population and 50 per cent of the urban population and this broadly accepted the Prof. Arjun Sengupta Committee’s recommendation that around 80 per cent of our population working in the unorganised sector could earn only Rs. 20 per day a decade back. (Since then inflation is running in 2 digits and income has either declined and/or the maximum number of wage earners are today unemployed.) The mainstream political parties are busy inventing new strategies to face the people’s anger in the forthcoming 2014 parliamentary election because the youth of this country has clearly demonstrated their frustration and resolve when they peacefully organised protest rallies in the cold wintry days and nights of December 2012 in Delhi and other cities of the country on the issue of the rape and murder of a college girl in the streets of Delhi.

Under the instructions of the international financial institutions, a new drama is being enacted in the few months before the next Lok Sabha election slated to be held in 2014 to convince the people about the sincerity of the government to root out corruption in the implementation of various welfare measures. In lieu of distribution of goods and services at subsidised rates the government proposes to transfer cash to the ‘economically weaker sections’ which the political parties claim as ‘people below the poverty line’. The government accepts the charge that ‘corruption in Indian administration’ has taken an epidemic dimension but the mainstream political parties are resorting to blame game and are avoiding to take any effective steps to remove corruption.  We propose to discuss the implications of the proposed ‘cash transfer’ policies of the government and how it will eliminate ‘corruption’ closely linked with various welfare measures.


We have to keep in mind the present system of handling various welfare schemes of the government and how they are proposed to be adjusted with introduction of the ‘Cash Transfer’ scheme. The government proposes to transfer ‘cash’ into an individual’s bank account in lieu of subsidised goods and services as is being done through the public distribution system or schemes like MGNREGS for the targeted beneficiaries. Already some schemes like the payment of monthly pension to senior citizens, stipends to children of scheduled castes, scheduled tribes and other backward castes, and specially, the payment of wages under the Mahatma Gandhi National Rural Employment Guarantee Schemes (MGNREGS) are being paid through individual bank/post office accounts. However, the Reserve Bank of India officially claims that only around 40% of Indians have bank accounts and around 50% of 638596 Indian villages have at least one branch of any bank. Thus ‘cash transfer’ under such a situation simply means either stoppage of all welfare schemes in the absence of banks/post office or the total loot of public funds or both. This is a well planned organised loot of public funds by the mainstream political parties just before the next parliamentary election. Moreover, one has to keep in mind that the politicians and their paid musclemen are experts in this business with years of experience in manipulating accounts and misappropriating public funds. Even now where cash transfer is taking place a massive fraud is being committed by the so called ‘public servants’!

A. Health

The state has to provide health security to all its citizens. It has to take special care in providing health care for the weaker sections especially children, senior citizens and women. The so called developed countries after being engulfed in severe recession since 2008, have totally withdrawn or drastically curtailed a large number of social welfare measures. The capitalist countries introduced these social welfare measures to fight the challenges thrown up by socialist countries in the 20th century. Cuba is the best example of health infrastructure for an entire population.

In India, the British developed medical infrastructure but no one expected an imperialist country to bother to ameliorate the health problems for the people of its colony. It was exclusively meant for ‘white sahebs’ and their wealthy brown Indians. In independent India this same policy has continued for the last seven decades with some minor alteration. Private hospitals, private medical colleges have grown like mushrooms under the public private partnership (PPP) system tailored by World Bank. The government lavishly donates costly land, grants bank loans at subsidised rates and allows them to import modern hospital equipment virtually free of custom duties so that these corporates can serve the well-to-do section of population better and maximise their profit. Some of these corporate backed hospitals are earning huge foreign exchange from so-called ‘medical tourism’. Civic bodies have refused to implement safety laws applicable for such institutions knowing fully well its implications on the lives of their patients. Whenever any accident happens only the captive patients and the low paid staffs are made scapegoats while not a single director of these corporates has ever been prosecuted for killing innocent sick, helpless and captive patients.

Ill equipped medical colleges promoted by private capital charge irrationally high capitation fees and are engaged in very low quality medical education. Both the government at the centre and those in the states are responsible for such anti national health policies. The minimum requirement of a statutory regulatory authority on public health is not acceptable to profit-seeking greedy corporates engaged in health business in India. Someone had the courage to send one Chairman/President of the Medical Council of India behind bars for committing fraud and breach of trust. This is inevitable in a system that encourages profit maximisation providing medical services to countless hapless poor patients in an emerging economy.

In 2013 the poor and illiterate millions in the villages and tribal belts are virtually bereft of any modern medical facilities. In metropolitan towns these sections of the population are still neglected and they are condemned to suffer without any worthwhile medical benefit. Medical insurance is still restricted among a negligible section of population as they charge unreasonably high premiums and harass policy holders at the time of the settlement of claims. Due to pressure from the World Trade Organisation (WTO) India had to open doors to multinational insurance Companies and they are allowed to make profit in the Indian medical business.

Will the government allow people below poverty line to avail of the facilities in private hospitals? The Ministers, MPs and MLAs enjoy such benefits of good private medical care, then why people from below the poverty line are deprived of this benefit. Today in India two systems of medical care exist, one is the well organised ‘private hospitals supported by state patronage’ engaged in earning profit and other is the Government run/funded hospitals which are perpetually overcrowded, ill equipped and totally unaccountable to tax payers. These government hospitals have miserably failed to provide good health care facilities to the people of this country. The state cannot abrogate its responsibility to provide health care for its entire citizenry. The corrupt and profit hungry private sector must function within regulatory conditions and public scrutiny. It is the fundamental right of each citizen; illiteracy and poverty cannot be a reason to deny health care to any one in the 21st century. If the first citizen of the country has a right to get the best medical facility which is paid from state exchequer, then each tax payer is also eligible to get such service free of cost and shortage of funds is no excuse.


Keeping in mind the huge market of school education, profit making corporates are seen in all corners of urban India in this education business. The private schools (in India they are called public schools) charging unreasonably higher fees are spreading on gigantic scale. The government has decided to gradually withdraw from the field of school education. In real life hapless children are forced to get enrolled in overcrowded government schools because they cannot pay arbitrary capitation fees charged by ‘greedy’ capitalists.  Government is paying in cash for school education expenses to the reserved category students (Scheduled Caste, Scheduled Tribes and Other Backward Castes) – but meritorious students from the non-reserved category and those belonging to economically weaker families are totally neglected and are being deprived of the country’s education system. The recently introduced ‘right to education’ has created a flood for school education but where are the schools? Children from poor families have to supplement the income of their families by working as child labour and such laws have no meaning for these millions of child workers.

Education in the 21st century includes education to qualify for ‘entrance tests’ in various higher educational institutions. We know ‘coaching institutions’ charge astronomical fees that even millions of qualified children from middle class families cannot pay and they are automatically sidelined from the beginning from this competition. Inequality of opportunity for admission in higher education based on money power has developed to monstrous proportions and the state is fully responsible for encouraging this destructive ‘inequality of opportunity’. Can the state solve the problems of the ‘education’ of millions of children who are denied of higher education, both general category and technical, created by the market economy? Transferring some ‘cash’ to these students will not be helpful, continuous monitoring and guidance is a must so that they may complete their study successfully. Almost all the Government funded higher educational institutions are declared sick and mainstream political parties are happy that they are destroying these institutions of higher learning by introducing criminals in all branches of higher education.


To provide adequate food to each member of a family throughout the country is the minimum expectation from any ‘democratic’ Government but in 2013 if any individual is forced to go to bed even for a single day without food for no fault of himself/herself, the Government has to explain its failure to fulfil its constitutional obligation.

The word ‘subsidy’ when related to food is criminal terminology, food has to reach every individual, it is immaterial whether an individual can pay the price or not. Governments have to run these food shops as it is its constitutional duty and the concept of ‘loss’ has to be deleted completely from such activity. Those who cannot pay should be provided with jobs so that he/she can purchase food. If the government fails to provide employment and purchasing power, no citizen can be deprived of food, it is not his/her fault if they cannot pay for the food.

However, in a market economy the principles followed are: ‘survival of the fittest’, it means if you can pay for your food you will get it, otherwise you have to go to bed without it.  We are bored to hear the stock excuses by the bureaucracy that (1) the  available foodstock in the country is ‘not sufficient for all of us’ to get and (2) the financial liability of the state to implement the ‘right to food for all’ is beyond the means of Indian state. Recent agitations in different parts of the country by the youth clearly indicate that ‘they are 99.9% and they cannot be deprived of their right to food by 0.1% of the people in a democratic system’. In other words, governments both at the centre and in the states may declare at its own peril that right to food to all citizens will have to wait for an indefinite period! 

 It took seven years for the people of this country to convince the Supreme Court that our national resources belong to the people and that they are not to be misused to enrich a small section of the population. The Supreme Court’s decisions on the sale of air-waves (2G and 3G) to mobile companies clearly show that natural resources are the nation’s property and the wrong decisions of the government resulted in a jail sentence to the concerned minister. The decision on the allocation of coal to the selected few is also pending in the Supreme Court.

India has an organisation called the ‘Planning Commission’ since the fifties. It recently announced the 12th Five Year Plan to the nation (2013-18), but it refuses to accept any responsibility for the ‘horrible’ state of affairs of the country by the end of 11th Five Year Plan. Till to-day more than 95 % of the Indian workers are earning their living in the unorganised sector despite huge investments in organised industry and trade. Those who are lucky to work in the organised sector are mostly working as labour supplied by ‘exploitative’ contractors. Since the early nineties the labour laws have been kept in cold storage in the country. A recent example of labour exploitation is exposed by the ‘criminal’ activity of the management of Maruti-Suzuki in Gurgaon, Haryana. If the Planning Commission of a vast country of 1200 million people does not have any policy of employment for workers between the age of 18 years and 60 years, why people will pay tax to run such a huge establishment. In the recent period the  Planning Commission is involved in a controversy on spending lakhs of rupees on the construction of  one/two toilets in its Delhi office, and fabulous amount was spent on a foreign tour of its highest official!

It is a fact that both the welfare capitalism of the west and the capitalism of Russia and China are in total distress. Capitalism does nothing to honour the accepted principles of ‘equality, liberty and fraternity’. The emerging economies led by India are yet to find the correct government policies so that they can guarantee to their billions of people not only the availability of food, shelter and clothing but the right to live a dignified human living.

B. Subsidies to commerce and industries:

These include broadly two different areas:

1. Subsidies demanded by organised trade and industry e.g. to promote exports from India, is being helped by Government of India, though no one has ever raised the  question on the cost benefit analysis of this subsidy. Recent experiments with Special Economic Zones (SEZ) has proved how land acquired under SEZ is misused by corporates to develop real estate business and exports never started from many SEZs even though lakhs of acres of fertile agricultural land was acquired by the state for these SEZ. Both direct and indirect tax concessions by the centre and the states to the corporates have increased to scandalous proportions since 2008 (Table I). Another manipulative practice legally allowed is ‘no tax liability’ if investments are made from countries like Mauritius. Corporates like Vodafone (registered in England) were charged to pay ‘capital gain tax’, but the government of India succumbed to pressures of various countries. India is a sovereign country and the United Kingdom while arguing for Vodafone’s tax issue forgot to honour the ‘right of the Indian Parliament to enact laws for the country’. Thus as an emerging economy there is continuous pressure on India to allow MNCs to export their goods and services to India and in this game the WTO, World Bank and IMF are continuously playing the role of pressure groups against the interests of Indian people. After the 2007-8 recession in USA and the EU all the heads of the so called developed countries visited India and India entered into long term agreements to import their products and help them to recover. One important item in this trade list are ‘atomic reactors’. They have been discarded by the developed countries and these companies have been successful in selling these to India. It hardly matters if people protest against such anti-national projects. Purchase of technically defective Boeing planes called ‘Dream liners’ by Air India, is the latest example how poor countries are taken for a ride by these developed countries. MNCs and their Indian counterparts are allowed to enjoy a captive market of one billion consumers where inflation of two digits is simply manipulated to continue for years by the anti-people fiscal and monetary policies.

2. Demand for petroleum products like LPG, kerosene, petrol, and diesel are increasing every day. India imports 80% of its energy requirements and as a result the foreign exchange outgo is substantial resulting in increasing deficits. Another important item on which the state spends a lot of subsidies is on fertilisers. This subsidy is paid to fertiliser producers and other middle men who import it. There is long pending demand to modernise the fertiliser factories in India and reduce the cost of production. 


The institutions created by imperialist countries after the 2nd world war e.g. World Bank, IMF etc. have proved totally useless in the 21st century. They were created to further the interest of the developed economies after 1945 to exploit the people and the natural resources of the third world. The sufferings of the people of the developed countries started with the recession of 2007-08 and it is still going on. These institutions are still busy in destroying the poor people of the world. ‘Cash transfer’ in these circumstances is a myth because the poor malnourished millions of India want jobs to earn a living and to live like human beings. Corruption is inbuilt in the concepts of market economy, it gives encouragement to ‘greed to accumulate wealth’ and create ‘widening disparities among various social groups’. If cash transfer is successful in some Latin American countries, viz. Brazil and Mexico it is because their per capita income is higher than that of India and the total population of these two countries is much less than total population of just  three states UP, Bihar and Maharashtra of India. The policy makers are under constant pressure by imperialist powers to innovate new strategies on how to loot the resources of the country and make a small selected group in India dollar billionaires. It is, therefore, essential that working millions of this country must be aware that unless each one of us know the ‘hidden agenda of this cash transfer’ scheme and read clearly the danger signals written on the wall in bold letters, our future generation may not excuse us for our wilful neglect of our duty to the people of India.


Year Revenue Forgone Bad Loan of Banks Subsidies Paid
2008-09 4,20,946 68,973 1,23,581
2009-10 4,37,290 84,747 1,35,508
2010-11 4,22,879 96,795 1,31,212
2011-12 4,87,112 1,05,000 2,16,297
Total 17,68,227 3,55,515 6,06,598
(Rs crores)

1. Revenue foregone: P. Sainath, The Hindu 26.3.12
2. Subsidies: Economic Survey – 2011-12
3. Bad Loans: Economic Times: 13.3.12 & 18.11.12 

Note: 1.  The total appropriation by the rich and the corporates during 2008-09 to 2011-12 from the public fund  including non payment of bank loans (the King Fisher airline is not included) was Rs. 21.23 lakhs and the subsidy amount was hardly 28.5 per cent of what was doled to the richer sections by the state.


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