Cash transfer schemes for women should be reviewed in light of inflation: PM advisory panel

New Delhi, Unconditional cash transfer (UCT) schemes for women, implemented by various state governments, should be reviewed periodically for adequacy in light of inflation and evolving household expenditure patterns, the Economic Advisory Council to the Prime Minister (EAC-PM) said in a working paper on Monday.

The advisory panel further said UCT schemes implemented by Maharashtra and Odisha governments have generated large and broadly consistent improvements in beneficiaries' savings and consumption.

"Transfer amounts of UCT 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," it said.


The paper titled 'Unconditional Women Cash Transfer Programmes in India: Evidence from Maharashtra and Odisha' provides a rigorous empirical evaluation of two large-scale state-level UCT programmes in India; the Mukhyamantri Majhi Ladki Bahin Yojana in Maharashtra (monthly transfer of Rs 1,500 to eligible women) and the Subhadra Yojana in Odisha (biannual instalments totalling Rs 10,000 per year), using account-level monthly panel data.

"Both programmes generate large, statistically significant, and broadly consistent improvements in beneficiaries' savings and consumption. "Month-end account balances increase by approximately 84 per cent (Maharashtra) and 45 per cent (Odisha), representing absolute gains of approximately Rs 6,884 and Rs 6,887 per beneficiary respectively," the paper said.

According to the paper, monthly consumption spending increases by 46 per cent and 28 per cent respectively, implying marginal propensities to consume of approximately 0.90 value.

The paper suggested that both programmes should be sustained and evolved toward cash-plus architectures that combine the income transfer with voluntary capacity-building, digital literacy, and SHG linkage components.

Remarkably, it noted that both programmes generate positive household spillover effects, improving the financial positions of family members while reducing their expenditure outflows, reminiscent of Friedman's Permanent Income Hypothesis but with independent decision-making.

As per the paper, a 10 per cent increase in beneficiaries' account balances under Subhadra Yojana was associated with a 1.9 per cent reduction in relatives' spending. In Maharashtra, the Ladki Bahin scheme was associated with a 23 per cent increase in relatives' month-end balances and a 49 per cent decline in spending, it added.

Spending basket analysis reveals a qualitative shift toward lifestyle-related, medical, and educational purposes alongside accelerated UPI adoption for beneficiaries, according to the paper.

Citing an example, the paper noted that in Maharashtra, for Ladki Bahin beneficiaries, ATM-related educational expenditure recorded the largest increase, from 18 per cent to 24 per cent.

In UPI transactions, lifestyle-related expenditure recorded the largest increase, rising from 37 per cent to 42 per cent, while medical expenditure increased from 8 per cent to 10 per cent.

Cash transfer programmes targeted at women have become one of the fastest-growing categories of state-level welfare spending in India.

By FY26, more than 15 states had introduced some form of unconditional monthly or annual transfer paid directly into women's bank accounts, at an estimated aggregate cost of roughly Rs 1.7 lakh crore and reaching close to 12 crore women.

The number of states running such schemes increased more than fivefold between FY23 and FY26, reflecting a convergence of evidence from development economics and political economy; direct income support placed in women's hands is a powerful and cost-effective instrument for improving household welfare, advancing financial inclusion and reducing gender-based economic exclusion.