Unconditional Cash Transfers (UCTs) to Women: Benefits, Initiatives & Challenges

• Economic Advisory Council to the Prime Minister (EAC-PM) released a working paper reviewing Unconditional Women Cash Transfer Programmes in India.

Unconditional Cash Transfers (UCTs) to Women

• Meaning: It is a mechanism for social welfare that places direct income in women’s hands for improving household welfare, advancing financial inclusion and reducing gender-based economic exclusion.
• Status: It has become one of the fastest-growing categories of state-level welfare spending in India.
  • Between FY23 and FY26, the number of states providing UCTs to women rose more than fivefold.
  • By FY26, more than 15 states had introduced it in some form, covering nearly 12 crore women at an estimated annual cost of ₹1.7 lakh crore.

Benefits of Unconditional Cash Transfers to Women

• Increased Expenditure: Maharashtra and Odisha saw increased expenditure by 46% and 28%, respectively, with quality-focused spending on lifestyle, medical, and educational purposes.
• Targeted Transfers: Cash transfers targeted specifically at women produced better household savings and spending outcomes than untargeted cash transfers.
• Intergenerational Externalities: Women tend to allocate higher shares of marginal income to food, health, and children’s education.
• Bargaining Power: Control over economic resources enhances an individual’s bargaining power within the household, thereby influencing decision-making outcomes.
• Development Outcomes: Women-focused transfers are expected to generate stronger developmental outcomes as women spend more on children’s education, nutrition, healthcare, etc.
  

  Government Initiatives for Unconditional Women’s Cash Transfer Programmes

  • PM Jan Dhan Yojana (PMJDY): Enables direct cash transfers through bank accounts, with women constituting over 55% of account holders.
  • Direct Benefit Transfer (DBT): Transfers welfare benefits directly into beneficiaries’ bank accounts, reducing leakages and improving transparency.
  • Ladki Bahin Yojana (Maharashtra): Provides monthly unconditional cash assistance to eligible women to enhance financial security and household welfare.
  • Subhadra Yojana (Odisha): Offers direct cash support to women, promoting economic empowerment and improving expenditure on health and education.
  • Ladli Behna Yojana (Madhya Pradesh): Provides monthly financial assistance to eligible women to strengthen social security, nutrition and financial inclusion.

Key Challenges with Unconditional Cash Transfer to Women

• Debt Burden: As per the RBI, the debt of all states put together was expected to rise to 29.2% of GDP in 2025-26, with several states having debt levels exceeding 30% of their Gross State Domestic Product.
• Investment Crowding: Particularly in physical and social infrastructure due to rise of such welfare expenditure like free electricity and direct cash transfers.
• Susceptible to Misuse: Commonly perceived as freebies, there is a risk of fostering a culture of dependency and being misused as a political tool.
• Dependency Risk: Frequent cash transfers may discourage labour participation and create long-term dependence on government support.

Key Policy Recommendations

• Periodic Revision: Transfer amounts may lose value due to inflation, requiring regular updates and better targeting of beneficiaries.
• “Cash-Plus” Approach: Combining cash transfers with financial literacy, skill development, healthcare access, and improved targeting for long-term empowerment.
• Sustained Focus: UCTs for women should be continued as a core component of the social protection system, rather than treated as temporary welfare measures.
• Digital Transfers: Strengthen Direct Benefit Transfer (DBT) to reduce leakages, lower transaction costs and ensure timely benefit delivery.

“Empowered women build empowered families.“ Well-targeted and fiscally prudent cash transfers, backed by DBT and financial inclusion, can accelerate Viksit Bharat 2047.

Reference: The Indian Express

PMF IAS Pathfinder for Mains – Question 743

Q. Despite the growing adoption of Unconditional Cash Transfer (UCT) programmes for women across states, concerns remain regarding their fiscal sustainability and long-term impact. Discuss the benefits of women-centric UCT programmes and the measures needed to enhance their effectiveness. (250 Words) (15 Marks)

Approach

• Introduction: Write a contextual introduction about the Unconditional Women Cash Transfer Programmes.
• Body: Write the benefits of women-centric UCT programmes, challenges, and the measures needed to enhance their effectiveness.
• Conclusion: Emphasis on targeted cash transfers, financial inclusion and fiscal sustainability to promote women-led development and social protection.