The Hindu Business Line : Cash or work: What do people want?

Conditional cash transfer schemes have been suggested as an alternative to the national rural employment guarantee scheme. But do people want the right to work or a cash dole? There is an ideological basis to this debate that merits threadbare analysis, say SOWMYA KIDAMBI and ARUNA ROY.

With the implementation of the NREGA, a new empowerment-based approach to fighting poverty has emerged, in sharp contrast to the condition-based handout.

In analysing the mandate of the 2009 elections, and acknowledging the importance of the “aam aadmi” agenda, the National Rural Employment Guarantee Act (NREGA) is becoming a common focal point, with even the Left and the BJP attributing the UPA’s electoral success to the NREGA effect. Although, the campaign across the country saw very few instances of direct attacks on the legislation, the electoral promises made by the Telugu Desam in Andhra Pradesh to provide monthly cash transfers did introduce an important ideological debate, offering an alternative approach to fighting poverty.

In AP, both the Assembly and Lok Sabha elections coincided. The TDP promised that every family would get free colour television sets and a monthly cash dole. Chandrababu Naidu attributed unqualified success to cash transfer schemes in various Latin American countries, without going into the details of the conditionalities attached to these transfers. A rhetorical choice was placed before the voter: do you want to put in the effort of slogging for a wage, or would you rather just have money coming into your account every month?

The issue is part of a larger international debate related to fighting poverty. It has powerful international proponents and is unlikely to fade away. What is this debate?

‘Conditional Cash Transfer’ has been used and propagated in different versions by the World Bank, as a method of providing a social safety net to the poor as well as improving efficiency of social sector services in large parts of South America and South Africa. With the passage of the NREGA in India a new empowerment based (rights based) approach to fighting poverty has emerged, in sharp contrast to the condition-based handout.

Different approaches

These two paradigms are at the core of a fast-growing debate among economists, activists, academics, policy-makers and politicians in different parts of the world. For us in India, it is crucial that we begin to understand the implications of the cash transfer scheme and analytically compare it to the merits and demerits of the entitlements approach of the NREGA. It is interesting to note that at a recent international meeting on NREGA convened in Delhi, many countries espousing CCT, expressed their preference for NREGA.

According to the World Bank, a powerful supporter of CCTs, conditional cash transfers provide money directly to poor families via a “social contract” with the beneficiaries — for example, sending children to school regularly or bringing them to health centres. For extremely poor families, cash provides emergency assistance, while the conditionalities promote longer-term investments in human capital. Conditional cash transfers also exist in countries such as Brazil, Chile, Mexico, Nicaragua and Zambia.

In a panel meeting convened by the World Bank in February 2009, many economists noted mixed results. While CCT programmes did correlate with a reduction in extreme poverty rates, they did not appear to demonstrate higher academic achievement and improved health among children whose families were receiving CCT grants.

In fact, in a paper “Conditional cash transfer programmes: Are they really magic bullets?” by Alain de Janvry and Elisabeth Sadoulet from the Department of Agricultural and Resource Economics, University of California at Berkeley, June 2004, some important and interesting conclusions were drawn by the authors, who analysed the CCT in Mexico.

They felt that CCT could only work with conditionalities. The tighter the programme’s budget constraint in selection of beneficiaries, the larger the potential efficiency gains from selection of beneficiaries and calibration of transfers. Given India’s experience with selecting families for the BPL and other “targeted” beneficiary schemes, this is a charter for disaster.

Corruption, exploitation

The vulnerability of the programme to corruption and the beneficiary to exploitation is also evident. In Mexico, for instance, the CCT called “Progresa” and recently renamed “Oportunidades” was introduced in 1997 to offer cash transfers to poor mothers in marginal rural communities, conditional on their using health facilities regularly, ensuring children’s attendance in schools in primary and secondary grades.

Children with more than three days absence from school, or non-visit to a health centre per month will not receive their cash due. A recent interaction with a researcher who works with women in rural Guerrero, Mexico, revealed alarming facts about leakages in the CCT. Rural women who accessed the health services were expected to pay illegal “user fees” for what should be free primary public health services; under threat of removal from the CCT (most primary health care at rural clinics in marginalised communities should be free by law).

Women complained that more than 50 per cent of the CCT money received was spent on illegal “user fees” paid to public health systems, and to bribe doctors. In schools, 30 per cent received was paid to teachers to get certificates to ensure that they stay on the transfer list.

In stark contrast, the NREGA passed by Parliament in 2005, is a legal entitlement to 100 days of labour-employment for all rural families. Any adult member of a family can demand work from the government any time, with a guarantee of an allowance on failure to provide work. It empowers public monitoring, transparency and access to government records — project details, muster rolls on the details of expenditure related to labour payment, work and payment records — to anyone who asks, within seven days of receipt of application.

Monitoring the system

Gram Sabhas are empowered to conduct mandatory social audit periodically in the villages to ensure compliance with transparency and accountability that the Act mandates. Andhra Pradesh has demonstrated dramatic results in NREGA social audits with large-scale recoveries and action against erring officials. The NREGA has taught people to use and monitor the system.

The selection of beneficiaries for this scheme would expose our Achilles heel. Introducing a selection criterion will itself be difficult, if seen in the context of the BPL debate and its implementation. The scheme would also fundamentally undermine the act of seeking transparency and accountability by the most vulnerable — something the NREGA has succeeded in fostering — even in areas where implementation has been weak.

The offer of monthly cash handouts is a seductive electoral promise. Elections are the wrong time to debate an issue such as CCTs superficially, without fully understanding the details. In the light of the issue of a variant of the Cash Transfer Scheme being raised in States such as Bihar too, the CCT needs to be debated, in the public domain, with the beneficiaries for its possible implications for their participation in development.

Commentators who have been consistently critical of the NREGA have begun to suggest the alternative of CCTs. While the entitlement approach of NREGA will no longer face the frontal assault it has since its inception, it could well be undermined by such alternatives. Do people want the right to work, or a cash dole? There is an ideological basis to this debate, and it merits threadbare analysis that will reach the people themselves.

(The authors are members, Mazdoor Kisan Shakti Sanghathan, Rajasthan. blfeedback@thehindu.co.in)