A few weeks ago, the then Secretary, Ministry of Women and Child Development, announced a plan to test the use of cash transfers in the context of the Integrated Child Development Services (ICDS) programme. This was followed by the Union Food Minister asking for States to initiate a pilot programme to replace the Public Distribution System (PDS) food ration with cash, a move that is already being tested in the Union Territories. Indeed, it’s fair to say that there is quite a buzz in policy circles about the potential for cash transfer schemes to address multiple outcomes while bringing administrative efficiency.
And yet, the evidence base to support large-scale programme switch-outs from food to cash is limited in the Indian context, given the diversity of social, economic and implementation contexts. The government’s push towards financial inclusion and the use of Direct Benefit Transfer (DBT) also means that these pilot programmes provide the perfect opportunity to add to the learning around cash transfer schemes in India.
Kalyani Raghunathan & Purnima Menon The Janani Suraksha Yojana (2005) has been credited (not indisputably) with increasing the number of institutional deliveries, while reducing infant mortality and increasing rates of breastfeeding. A recent randomised control trial in West Delhi found that replacing PDS food allocation with cash allowed families to switch from cereals to more nutritious food groups while not adversely affecting food security. UNICEF and the Self Employed Women’s Association tested an unconditional cash transfer in Madhya Pradesh and found evidence of a significant improvement in sanitation, access to drinking water, food security and child nutrition.
Apart from these studies, there are a handful of other CCTs that are undergoing evaluations at the moment. The Indira Gandhi Matritva Sahyog Yojana (IGMSY), and the Mamata scheme in Odisha are relatively recent maternity benefits schemes, with conditions like birth registration, pre and ante-natal care visits, and exclusive breastfeeding. The Bihar Child Support Grant (BCSP) is a CCT aimed at improving maternal and child nutrition outcomes. Results of evaluations of these programs are awaited. None of these programmes, however, replaces food with cash transfers.
While the move towards cash transfers as a way to reduce programme leakage in the ICDS and PDS is appealing, there is not a great deal of evidence on the impacts of cash transfer schemes on nutrition in India. Work by our colleagues in multiple countries, and recent synthesis papers, suggest that the following issues are central to the design of cash transfer programmes:
First, cash transfer amounts need to be sizeable, and regular. Lumpy payments at distant intervals do not work as well, presumably because they do not achieve the consumption smoothing that smaller, more regular payments do. Lumpy payments also hamper the ability to support changes in behaviours, especially routine food consumption behaviours, significantly.
Second, financial inclusion is not as easy to achieve as one might hope, with bank regulations and requirements placing considerable barriers on participation. It is possible that this will improve rapidly in the coming months and years, but ensuring financing inclusion and easy access to cash once bank accounts are opened are absolutely essential pre-conditions for cash transfers that are intended to support routine spending on nutritious foods.
Third, there needs to be a mechanism in place for monitoring adherence to conditions, if any. Following on that point, hard conditions (which result in penalties if not fulfilled) need to be easy to monitor – exclusive breastfeeding for the first six months is a good example of a condition that is almost impossible to verify.
Fourth, improving the demand for services by using conditions is only one piece of the story; the other side is making sure the services exist. Requiring mothers to appear for a certain number of ante-natal check-ups only has value if the health services are functional. Similarly, replacing ICDS food with cash will only work where local markets are functional and recipients can easily convert cash into nutritious food for children.
Fifth, targeting is a serious concern in India, as errors of wrongful inclusion and exclusion continue to plague several programmes. Programmes either need to be self-targeting, as with the Mahatma Gandhi National Rural Employment Guarantee Act, or devise a more accurate means of identifying the target population. Age-based self-targeting linked to pregnancy registration might be the simplest strategy for cash transfers within the ICDS, for example.
Last, but perhaps most important, the cash transfer must be accompanied with high quality information/education campaigns that encourage good nutritional choices. Work by our colleagues in Bangladesh has demonstrated clearly that cash accompanied by high intensity behaviour change communication (BCC) had large and significant impacts on calorie consumption, dietary diversity and child nutrition as compared to identical cash transfers without nutrition education.
With the possibility of a new set of pilot cash transfer schemes or large-scale initiatives being initiated in the months to come, we cannot overemphasise the need for first, careful attention to those design elements that will support the intended outcomes, and second, for careful research on the measurable impacts of these schemes. Studies from several different country contexts have shown that providing cash is cheaper than providing food of the same monetary value, which might seem reason enough to make the universal switch to cash. But outcomes are not guaranteed without investment in other design elements of these programmes. Before scaling these programmes up to the national level, let us be sure to ensure commensurate investment in evaluation along the way, and to carefully examine these pilots to examine what works, for whom, under what conditions, where and why.
Kalyani Raghunathan is Associate Research Fellow and Poornima Menon is Senior Research Fellow at The International Food Policy Research Institute’s Poverty, Health and Nutrition Division.
