New Delhi [India], January 25 : The Tsunami of the women centric Direct Benefit Transfer schemes announced by various states can bleed the state finances, says a report by State Bank of India.
These schemes, which aim to transfer cash directly to women, have gained momentum in recent years, particularly in the run-up to elections. However, the report warned that such initiatives could significantly impact state finances.
It said "there is a Tsunami of women centric schemes unleashed by multiple states offering direct benefit transfers (some badly guised as pure electoral realpolitik, we believe) that can bleed select states' finances"
The report highlighted that the total cost of these schemes across eight states has now crossed a staggering Rs 1.5 lakh crore, accounting for 3-11 per cent of these states' revenue receipts.
The report added that while some states, like Odisha, are better positioned to bear these costs due to higher non-tax revenues and no borrowing requirements, many others might face fiscal challenges.
It said "Some states have the capacity to pay for such schemes, for instance Odisha has higher non-tax revenue thus no borrowing"
For instance, Karnataka's Gruha Lakshmi scheme, which provides Rs 2,000 per month to the female head of a family, has an allocation of Rs 28,608 crore, making up 11 per cent of the state's revenue receipts.
Similarly, West Bengal's Lakshmir Bhandar scheme, offering a one-time grant of Rs 1,000 to women from economically weaker sections, costs Rs 14,400 crore, or 6 per cent of the state's revenue receipts.
Meanwhile, Delhi's Mukhyamantri Mahila Samman Yojana, which promises Rs 1,000 per month to adult women (excluding certain categories), amounts to Rs 2,000 crore, or 3 per cent of revenue receipts.
The SBI report also noted that with the growing trend of promising income transfers to women, even the central government might feel pressured to adopt similar policies.
It suggested that a universal income transfer scheme, with matching grants from the Union government to states, could be a more sustainable alternative to the current approach. This, the report argues, could also help reduce market-disrupting subsidies.
While these schemes are seen as a way to empower women and gain electoral support, the report urges states to consider their fiscal health and borrowing patterns before implementing such welfare programs.
It added "It would be worth taking course to adopt a universal income transfer scheme (matching grant from center to states) towards substantially reducing several market disturbing subsidies"
A holistic view of welfare spending and its long-term impact on state finances is essential, the report concluded.
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