‘Review periodically’: PM’s advisor bats for cash transfer to women

“Both programmes should be sustained and evolved toward cash-plus architectures that combine the income transfer with voluntary capacity-building, digital literacy, and SHG (self-help group) linkage components… Transfer amounts should be reviewed periodically for adequacy in light of inflation and evolving household expenditure patterns, with efficiency gains from improved targeting deployed to fund enhanced benefits and complementary services for beneficiaries,” the paper further said.

Ghosh is a part-time member of the EAC-PM and State Bank of India’s Group Chief Economic Advisor, while Shagishna K is an economist in SBI’s Economic Research Department.

The paper analysed account-level monthly data to evaluate Maharashtra’s Mukhyamantri Majhi Ladki Bahin Yojana and Odisha’s Subhadra Yojana. The former involves the monthly transfer of Rs 1,500 to eligible women, while the Subhadra Yojana scheme offers biannual instalments totalling Rs 10,000 per year.

As per the results of the analysis by Ghosh and Shagishna, the Maharashtra cash transfer scheme raised month-end balances by 84%, or Rs 6,884, for each beneficiary and spending by 46% (Rs 1,349). In Odisha, on the other hand, balances rose by 45% (Rs 6,887) and spending by 28% (Rs 1,920). It was found that for every Rs 100 of cash that was transferred, Rs 90 was spent. Older women saved more, while women with lower education showed the urge to spend on education.

“Remarkably, both programmes generate positive household spillover effects, improving financial positions of family members while reducing their expenditure outflows,” the paper said, noting that a 10% rise in the account balances of women in Odisha was associated with a 1.9% decline in their relatives’ spending. Meanwhile, in Maharashtra, it was associated with a 23% jump in relatives’ month-end balances and a 49% fall in their spending.

“Such results are in conformity with global trends that reveal women-focused transfers generate stronger developmental outcomes than gender-neutral transfers, but in India the digital story has revolutionised such payment mechanisms,” the paper said, adding that adoption of Unified Payments Interface (UPI) accelerated significantly after transfer receipt in Maharashtra, “documenting an important digital financial inclusion dividend”.

The EAC-PM paper comes at a time when cash transfer schemes for women have become increasingly popular even as concerns mount over the financial situation of state governments. Elevated debt levels at the Centre and state levels – often referred together as general government debt – have been repeatedly cited by global ratings agencies as a key weakness of India’s public finances. In October 2025, PRS Legislative Research had estimated that 12 states would spend Rs 1.68 lakh crore on providing unconditional cash transfers to women in 2025-26.

Earlier this year in January, the Reserve Bank of India had called on state governments to target a reduction in their debt levels, like the Centre, as “high level of debt comes in the way of investment and growth”. According to the central bank, the debt of all states put together was expected to rise to 29.2% of GDP in 2025-26 from 28.1% in March 2024, with several states having debt levels exceeding 30% of their Gross State Domestic Product.

Noting that several states had introduced measures such as free electricity and direct cash transfers to women, the RBI had said that while social welfare programmes are essential in a country such as India where economic disparities remain stark, “these welfare expenditures run the risk of crowding out critical investments in physical and social infrastructure”.

However, economists have also highlighted the positive impact of even small targeted and unconditional cash transfers to women, arguing they offer protection from shocks such as diseases and help better the well-being of their household, improve food security, contribute to the education of children, and promote savings.