Will cash transfers help SC/STs better? A look at a Niti idea | Latest News India - Hindustan Times
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Will cash transfers help SC/STs better? A look at a Niti idea

Hindustan Times, New Delhi | ByAbhishek Jha
Dec 07, 2020 12:00 PM IST

On November 27, the Economic Times reported that Niti Aayog had proposed a plan for replacing the existing Scheduled Castes Sub Plan (SCSP) and Tribal Sub Plan (TSP) method of budgeting for the Scheduled Castes (SCs) and Scheduled Tribes (STs) with a central consolidated fund.

The idea of cash transfers of various kinds, from Universal Basic Income (UBI) to replacing producer and consumer subsidies with them, have been doing the rounds of policy making circles for a long time now. In some cases, such as subsidies on cooking gas cylinders, subsidies are now being directly transferred to consumers.

In the last five years, the total spending under SCSP and TSP has risen from 2.8% to 4.5% of the size of the budget, although figures for 2019-20 and 2020-21 could be revised downwards.(Reuters file photo. Representative image)
In the last five years, the total spending under SCSP and TSP has risen from 2.8% to 4.5% of the size of the budget, although figures for 2019-20 and 2020-21 could be revised downwards.(Reuters file photo. Representative image)

On November 27, the Economic Times reported that Niti Aayog had proposed a plan for replacing the existing Scheduled Castes Sub Plan (SCSP) and Tribal Sub Plan (TSP) method of budgeting for the Scheduled Castes (SCs) and Scheduled Tribes (STs) with a central consolidated fund. Forty per cent of this fund is proposed to be spent through direct conditional cash transfer to SC and ST households with a monthly income less than Rs 5,000 per month. The remaining 60% is likely to be earmarked for infrastructure development in districts with a high population of SCs and STs.

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While no such official announcement has been made by the Niti Aayog, and the government does not accept all Niti proposals, it is worth examining what such a proposal entails.

How is the SCSP/TSP money spent currently?

Since the 1970s, the central government has earmarked funds for development of SC and ST communities under the SCSP and TSP in proportion to their share in total population. This means that 16.6% (share of SCs in the population according to the 2011 census) of plan funds were to be spent as SCSP and 8.6% (share of STs in population) as TSP. Although the plan and sub-plan components of the budget were merged in 2017-18, ministries are still required to spend a certain percentage; at least half of the share of SCs (8.3%) and STs (4.3%) in population, of their expenditure on central sector and centrally sponsored schemes on the welfare of SCs and STs. The total budget for SCSP and TSP was Rs 83,257 crore and Rs 53,653 crore in the 2020-21 budget.

In the last five years, the total spending under SCSP and TSP has risen from 2.8% to 4.5% of the size of the budget, although figures for 2019-20 and 2020-21 could be revised downwards. In 2020-21, just eight ministries out of the 33 which allocated money under these plans accounted for 80% of the total spending. They are the ministries of education (earlier human resource development), rural development, health and family welfare, and agriculture and farmers welfare.

 

One of the reasons given by Niti Aayog for combining this welfare expenditure by different ministries under a central fund is that currently this spending is not always part of schemes targeting SC and ST communities specifically. This is also the view held by activists. An analysis of most SCSP and TSP schemes (comprising 83% of total such allocation) in the 2020-21 union budget by the National Campaign on Dalit Human Rights (NCDHR), a non-governmental organisation, for instance, identified only 34% of the amount as being allocated to schemes that benefit the SC and ST communities directly. A direct cash transfer of 40% of the total allocation, as proposed by Niti Aayog, could be an improvement on that figure.

What could the direct cash transfer amount to?

In the past three budgets, 40% of the allocation made for welfare of SCs and STs — the share proposed to be transferred directly — was Rs 36,493 crore, Rs 48,882 core and Rs 54,764 crore. But how much will it amount to in terms of per person transfers? It depends on what the selection criterion is. The ET report says that Niti Aayog is considering Rs 5,000 monthly income as the threshold. India does not have regular data on incomes of households.

The findings of the latest Periodic Labour Force Survey (PLFS) can be used to get a rough idea on this count. The PLFS gives wage or salary income details for the salaried, self-employed, and casual workers. It also classifies households by social groups. The 2018-19 PLFS estimates 263.9 million households in India, of which 51.8 million and 23.5 million are SC-ST households. The share of SC-ST households earnings less than Rs 5,000 is 11.6% and 19.2%, which comes to roughly 9.2 million households. This means that if the allocations made in the 2020-21 budget were used, the cash transfer could amount to Rs 4,959 per month for each household. This number would fall to Rs 1,310 per month if the threshold were to be increased to Rs 10,000 per month.

To be sure, this analysis excludes 13% of the households across all social groups that didn’t have an employed and earning household member, and any income households might have from sources other than wages – such as rent or interest on investments.

 

Where will the proposed infrastructure spending go?

Niti Aayog has proposed that the remaining 60% of the existing SCSP and TSP amount, after giving 40% of it in cash transfers, should be spent on infrastructure development in districts with high population of SCs and STs. West Bengal is likely to be the biggest beneficiary of such an exercise. Almost 90% of West Bengal districts (17 of 19, according to the 2011 census) are among the top 20% districts with the highest population of SCs and STs. Three-fourth of the districts in Andhra Pradesh and Telangana combined (17 of 23 districts according to the 2011 census) also figure among the top 20% of districts.

 

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