This is just a reproduction of the editorial in The Hindu written by Mihir Shah published on 20,sept 2008.
This editorial is a reply to the book “first best option” written by the economist Arvind Subramaniam. This book deal with Direct Cash Transfer (DCT) as a solution to address poverty in India. He makes a strong case for his theory.
According to Arvind India has granted a total monetary support of about Rs 2,00,000 crore including various subsidies on fertilizers , food and fuel et cetera . So if we divide this entire amount among the people it is meant for ,it would come upto 1 crore for every gram panchayat . Mr.Arvind feels that people know what to do best with there money so why not transfer this amount directly to the people it belongs to so that they can fend for themselves. The government will be saved of a lot of burden if the rural areas can practice self governance.
This articles by Mihir Shah contradicts Arvind theory by giving suitable examples .Shah starts of by saying that anti-poverty programmes will work only if they lead to sustainable lively hoods for the people and end the dependence on doles .
He shows various situations in which just DCT has failed miserably. He talks about the Indira Awas Yojana , the SGSY where the DCT has failed to be propitious ,
Indira Awas Yojana which is a DCT to help poor build houses has not bought about suitable results . A lot of money has been transferred to the poor people and the heads of the gram panchayats but the problem has been the translation of money into houses . As poor people have different priorities at various points of time and they use the money they get for a different purpose. Sometimes they don’t end up building a house because the money they get is insufficient to build a house and also they do not have sufficient inputs like masons and materials etc.
Secondly he talks about SGSY which grants loans for income generating activities. The government has transferred a lot to people who want to start off a business without ensuring that the people have sufficient knowledge and required inputs to carry out the activities profitably. This has turned a lot of people into loan defaulters.
The third area where Arvind felt the direct transfer of money would be beneficial was in place of PDS , but the during these time of spiralling inflation the poor will not be able to procure food from the open market .
The NREGS is held up as a DCT where infact it is not. It is an organised scheme where people are given employment which could help private investments.
India right from 1992 after the liberalisation policies has been shown as a ever growing country . But these reforms which have taken place failed to take the rural areas under their ambit . The rural areas lack development though there are crores of rupees being issued for their development. This has happened for quite a few reasons like lack of proper leaders and even the politicians who have shown a blind eye for the rural areas.
Rural development is imperative now that most of the cities are saturated and so we need to infuse a lot of professional into this sector. It is high time we don’t look at this as some kind of charity and work seriously to develop our rural areas .
Thus anti-poverty programmes need more than DCT to succeed. Strengthening institutions, providing appropriate technologies, skill development are of paramount importance for the rural people and for them to have a sustainable income.