But for this to work, the common man (read the poor) has to be defined and one can’t resort to R.K. Laxman. Several (around 15, not only Brazil, Mexico and Indonesia) developing countries have experimented with cash transfers, both conditional and unconditional. Conditional transfers are contingent on BPL households attaining some developmental outcomes — sending children to school, immunising children, obtaining skills training. Often, there are paternalistic responses in opposition to unconditional cash transfers. The poor are irresponsible — they will spend money on cola, cell phones, liquor. They shouldn’t have unrestricted right to choose. Accordingly, conditional transfers also have this paternalistic element, usually linking subsidies to human capital investment. Interpreted thus, coupons or vouchers (food, education, health, fertiliser, kerosene) are also conditional transfers, since they can only be used for specific

purposes. But they do introduce elements of choice, competition and efficiency. Whenever cash transfers (conditional or unconditional) are mentioned, three counter-responses are encountered. First, giving money is demeaning. It’s like doles and charity. It’s far better to give jobs instead. That’s a strange argument. As with NREGA, no one is forcing beneficiaries to receive subsidies. It’s a voluntary system.

Second, we don’t have resources. That’s a strange argument too. Cash transfers are revenue neutral. No one has suggested there should be cash transfers while retaining present subsidies. Third, we don’t have administrative delivery mechanisms. That’s a stranger argument. In any targeting, there are problems of exclusion (not including deserving poor) and inclusion (including non-deserving non-poor), especially if proxy and collective (community, geographical location, religious or caste background) indicators are used instead of individual means-testing. But is it the case that present subsidies don’t have these problems? On the contrary, there is enough evidence to show the present mechanisms are riddled with these problems. If anything, cash transfers should reduce these problems.

... contd.