States Reconsider Women’s Cash Transfer Programs Amid Growing Budget Deficit St ...
State governments across India are facing rising subsidy bills, higher debt and slowing revenue growth, putting a strain on public finances. State governments are now reviewing the sustainability of unconditional cash transfer schemes for women.Welfare programmes have become a vital welfare and political tool in recent years. But now, to keep welfare commitments in balance with fiscal discipline, several states are scaling down payouts, tightening eligibility norms or delaying implementation. The move comes as worries grow about the long-term affordability of these schemes as spending priorities clash with demands for investment in infrastructure, healthcare and education.
Welfare Spending Faces Fiscal Test
Women’s cash transfer schemes have proliferated in recent years, with more than a dozen states now offering eligible women direct monetary assistance. Monthly payments vary from state to state, but are generally between Rs 1,000 and Rs 2,500, and have become a prominent feature of election promises and annual budgets.
However, the rapid expansion has greatly increased the recurrent expenditure of states. The states are likely to spend about Rs 1.68 trillion on unconditional cash transfers to women in FY26, which is about 0.5 per cent of India’s GDP, according to estimates by PRS Legislative Research. Economists say such recurring commitments are hard to undo once beneficiaries are enrolled, making them a permanent fixture of state budgets.
State borrowing has increased, and consequently, fiscal pressures have increased. Gross market borrowings of states saw a jump in FY26 with double-digit growth in borrowings by several states running cash transfer schemes, CRISIL said. Analysts warned that increased welfare spending could shrink the fiscal space for capital expenditure, especially for infrastructure projects vital to long-term economic growth.
Balancing Welfare With Long-Term Growth
Recent research suggests that direct cash transfers have produced tangible benefits for women and their households, although they are not necessarily affordable. Beneficiaries in Maharashtra and Odisha saved more and spent more on healthcare, education and essential household needs after receiving financial assistance, according to the research of the Economic Advisory Council to the Prime Minister (EAC-PM). The report also pointed to positive spillover effects for other family members, boosting household consumption and financial stability.
The EAC-PM says states should regularly check the value of cash transfers to keep up with inflation and changes in household spending. While encouraging a cash-plus model, which gives help and also focuses on skills development and teaches people about money and better healthcare access. Allowing women to grow economically independent.
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