SOIL Report 2011 - ACCESS Development Services

Potential and Possibilities 147infrastructure. For instance, the successof Bihar’s Mukhyamantri BalikaCycle Yojana (MBCY) was not just dueto cash transfers; 4 it was preceded bythe appointment of 300,000 teachers,establishment of 100,000 classrooms anda substantial increase in expenditure onelementary education (Swarup 2010).Similarly, the success of Brazil’s BolsaFamilia 5 and Mexico’s Oportunidades 6was vastly due to the earlier investmentsin, and existence of, the essentialservices, such as banking infrastructure,schools, health care facilities and so on(Himanshu 2011). In India, as of now,the social infrastructure, which wouldallow the poor to benefit from cashtransfers, is minimal.4. Region specific socioeconomic aspects ofcash transfers: Lastly, one of the critiques4Mukhyamantri Balika Cycle Yojana (MBCY) waslaunched in 2006 in Bihar to encourage the girl childfrom dropping out of education. Any girl who enrolsfor Class IX is given `2,000 to buy a bicycle, and `700for uniform. Till 2010, Bihar government had spent`174.36 crore on bicycles for 871,000 schoolgirls. Theprogramme has had positive impact on girls’ education.The dropout rates went down from 17.6 per cent to6 per cent during 2006–09, and the enrollment of girlstripled from 160,000 to 490,000 during 2006–10.5Bolsa Familia was launched in Brazil in 2003 as aregular monthly grant to poor households, providedthey could meet three conditions: 85 per cent attendancefor 6–15-year-old children, regular health checkupsand immunization for children and for pregnantwomen. Considered to be the world’s largest CCTprogramme, it had a remarkable impact, with povertyrates falling down from 22 per cent to 7 per cent, schoolattendance and enrollment increasing by 4.4 per centand 11.7 per cent respectively, and 26 per cent increasein the health indices of children.6Oportunidades was launched in Mexico in 2002,and offered a monthly allowance to poor familiesprovided they met certain conditions related to schoolenrolment and attendance, participating in healthrelatedmeetings, and regular health check-ups, especiallyfor women and children. By 2010, the programmehad shown significant improvements in the health andeducational status of the poor. The average householdconsumption and nutrition had increase by 13 per cent,and visits to health care centres during pregnancy hadgone up by 8 per cent . School enrolment rate had shotup by 70–78 per cent, while the labour-force participationof boys had decreased by 15–25 per cent.of cash transfer proposal is that in manyways, it does not address the problemsof access, which are largely embedded inthe socioeconomic conditions of specificregions and population segments (Alagh2011). For instance, cash transfers forfertilizer subsidies do not address theissue of inaccuracy of land records, andthat they would exclude the tenantsand sharecroppers, whose livelihoodsdepend on land which they cultivate butdo not own. Moreover, the use of fertilizersdepends much on local factors,such as soil fertility, weather conditions,availability of water and so on. Theseregional variations are not captured bythe mechanism of cash subsidies.Likewise, cash for grains does notfactor in the inflation in food prices,which has increasingly become a recurrentphenomenon during the last fewyears. In fact, some studies (Cunha et al.2010) show that cash transfers have aninflationary effect since they increasethe demand of normal goods and services.Moreover, this inflationary effectis more prominent in remote villageswhere there are few shops, and thereforelow competition among sellers.Large-scale procurement for PDSalso acted as a mechanism for stabilizinggrain prices and keeping inflation incontrol. In the absence of such checkson market prices, the cash transferscan inadvertently incentivize hoarding,black-marketing and, consequently,inflation. In order to prevent this, andmake the cash subsidies a viable mechanismfor poverty reduction, they wouldneed to be complemented by an equallyfocused effort on improving the governancemechanisms.ReferencesAhluwalia, M.S. 2011. Prospects and policy challengesin the twelfth plan. Economic & Political Weekly21 May, XLVI (21): 88–105.Alagh, Y.K. 2011. What cash transfers can’t solve.The Financial Express, 31 March. Available at