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Cash Vs In-kind
However, the message is also that use of
technology without sufficient penetration
may actually do more damage to the credibility of the technological innovation rather
than help streamline delivery of subsidies in a better way
.... A policy initiative in India
Cash
transfers are the new mantra for resolving all the problems that plague service
delivery in India. However, cash transfers are neither new (scholarships,
pensions and even NREGA payments are all cash transfers) nor does the much hyped
roll-out of Direct Benefit Transfers through Aadhar in 21 districts
involve any scheme which is not already a cash transfer. The debate really
is about the future possibility of converting existing in-kind subsidies such
as food, fertiliser and fuel into cash. Theoretically, there is nothing wrong
in a system of cash subsidy delivery
so long as beneficiaries can
purchase the equivalent amount of goods and services through the cash.
Proponents of cash transfers see this as a magic bullet not because this
improves outcomes in terms of the stated purpose of subsidies but because it
may cure problems in present service delivery which at present is plagued with
serious leakages. Another argument in favour of cash transfers is that current in-kind
subsidies are market distorting and the belief that therefore cash
transfers may be more
efficient.
