How ‘revdis’ became the staple in India’s welfare system 

A look back at the evolution of cash transfer schemes.

For so many of us the boom in the number of ‘income transfer’ schemes for women in India may seem an idea from the thin air or that state governments are using it as an election gimmick.

However, this model, strongly advocated as an antidote to growing wealth inequalities, increasing job precarity and rising climate crisis; and for its strong emancipatory benefits and positive impacts on financial indicators, has been around for many decades.

Its origins in India can be traced to around mid-2000s when conversations were going on about the high cost of administering welfare; a staggering 3.65x of the actual benefit (wrt Public Distribution Scheme). Around the same time, the release of Arvind Subramanian’s paper ‘The Case for Direct Cash Transfers to The Poor’ proposed that food, fuel and fertiliser subsidies sponsored by the central government should be replaced with a single direct cash transfer to overcome the administrative incapabilities of the system.

The year 2010 was when the largest basic income pilot in India, jointly implemented by SEWA (Self Employed Women’s Association) and UNICEF, which included monthly payments to 6,000 people in 8 villages of Madhya Pradesh for 18 months, was launched. Evidence of the transformative impacts on reduced hunger, malnutrition and illness amongst recipients, along with increased livestock ownership, improved school attendance and increased investment in agricultural implements, and no increase in substance use, was exactly what was needed, to set ground for the multiple pilots that followed.

A pilot where 100 families in Delhi received cash transfers in lieu of food grains revealed that contrary to popular expectation, there was no adverse impact on food security and in fact families were able to shift to more nutritious options and prioritise healthcare.

In early 2013, the DBT (Direct Benefit Transfer) mission was set up to reform welfare by simplifying delivery mechanisms, improving targeting and enabling faster flow of information and funds. The shift to cash transfers was marked through the advent of scholarships and pension.

The Economic Survey of 2016-17 led by Arvind Subramanian was instrumental in spotlighting basic income, with a 40-page discourse with detailed calculations with a proposed amount and implementation plan. The philosophical debate therein, rests on the pillars of social justice through the values of equality and liberty, agency for individuals to build their own lives and respond to shocks in a contextualised manner, poverty reduction and a guaranteed living standard to combat the challenges of ensuring employment for all. The conceptual case against UBI has been efficiently addressed through arguments of human dignity that should make room for choice; and the existence of inheritance in our society which delinks income and employment.

Recommendations for a basic income in India have ranged from 1% to 11% of the GDP with financing ideas including roll back of subsidies and utilisation from the general tax pool.

Along the way, we have also built what are today the most fundamental cornerstones of enabling direct payments to citizens’ bank accounts with minimal middlemen, reducing administrative hurdles and costs - the JAM trinity (Jan Dhan - Aadhar - Mobile). By 2018, 1.2 billion individuals had a unique ID (Aadhar card), by 2021 more than 530 million bank accounts had been opened under Pradhan Mantri Jan Dhan Yojana and there were more than 1.18 billion active mobile phone users.

The Congress manifestos in 2019 and 2024 elections included Nyay Patra, a focus on justice, which promised a basic income for families below the poverty line, building more mainstream visibility of the idea.

The real policy uptake began in 2018 and was bolstered by the shift to cash transfers during the COVID-19 pandemic, when delivering aid through other mechanisms failed.

Rythu Bandhu (Farmer’s Investment Support Scheme) launched in 2018, in Telangana, entails direct and unconditional cash transfers to farmers and has a budget allocation of INR 12,000 cr. This scheme is the exemplar on which KALIA (Krushak Assistance for Livelihood and Income Augmentation) for all cultivators in Odisha and PM Kisan for all farmers in the country are modelled. Similarly, the introduction of Jaganna Ammavodi scheme in 2020 which provides financial assistance to mothers, led to a spate of income transfer schemes for women from low-income backgrounds, now replicated by 12 state governments.

In the past 15 years, India has made rapid strides in breaking down the monolithic idea of Universal Basic Income, into a quasi-model, taking the questions of financial constraints head on. Periodic cash payments are now a common policy tool across parties. Simply by sheer quantum, our nation is the front runner globally, with Rs 2,50,000+ crore of the government budget, 1.6 percent of the GDP, being allocated to these schemes.