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Cash transfers still here, say analysts

delhi Updated: Aug 21, 2013 23:55 IST
Zia Haq
Zia Haq
Hindustan Times
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A key amendment being moved by food minister KV Thomas in the national food security bill seeks to replace certain words in the provision for cash transfers, a prickly issue, but analysts say the reworked clause pretty much means the same thing as the earlier one — food handouts may still be replaced with cash and there’s no change in policy.

Economists are divided on cash transfers, as are political parties. Replacing cash with food could compromise food security, experts say, but it helps the government save a lot of costs in buying, storing and transporting grains. Congress chief Sonia Gandhi too is believed to have advised caution with regard to cash transfers.

The bill aims at “introducing schemes, such as, cash transfer, food coupons, or other schemes, to the targeted beneficiaries in lieu of their foodgrain entitlements...”

The words “in lieu of” are now sought to be replaced with “in order to ensure”. The revised clause would read thus: “introducing schemes, such as, cash transfer, food coupons, or other schemes, to the targeted beneficiaries in order to ensure their foodgrain entitlements...”

“There is no difference in meaning. The option of cash transfers is very much there. This is attempt to hoodwink people,” said Prashant Bhushan, a legal expert.

Another legal expert said the new clause could, however, mean that the government may devise ways to ensure that the money disbursed is utilised to buy food.

This may be done by logging transactions at computerized fair price shops. Either way cash transfers would be part of the game.

Most experts think cash transfers would apply to “foodgrains”, not to mid-day meals, which are cooked food.

A study by economist P Svedberg had found that to transfer Rs. 1 to a household through cheap food, the government spends R9.

Cash transfers can save this cost, but 40% of Indians don’t have a bank account, necessary for cash schemes.

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