Bengaluru: Ahead of the Union Budget 2024, the government is mulling a cash transfer scheme for poor urban women, in a bid to boost consumption and demand in the one category where it has been weak.
Details are still being finalised, informed sources told DH, and such a move, if spelt out by Finance Minister Nirmala Sitharaman in her budget speech, will come with its own challenges. Namely, identifying the beneficiaries, and the fact that such a handout scheme, once announced, cannot be withdrawn in subsequent years without political ramifications.
However, similar schemes are already in place in a number of states, the latest being Maharashtra, and top policymakers in the Centre recognise the need to offer handouts to a particular group.
Domestic consumption has mostly been driven by the urban upper middle-class and the rich, while the rural economy is also improving on the back of expectations of a healthy monsoon, which leaves the urban poor as a particularly vulnerable group.
Sitharaman will present the Union Budget 2024 on July 23.
“There have been discussions on a cash transfer scheme for urban women from the unorganised sector. It is under consideration and the identification of beneficiaries may be done through the ‘e-shram’ portal,” said an official aware of the discussions in the Union finance ministry. The ‘e-shram’ portal is the Union labour ministry’s database for unorganised sector workers.
Pushing consumption among the urban lower-income group is a priority for the government, the official quoted above said. While India remains the world’s fastest growing major economy, most of it has been driven by public spending on infrastructure projects. Household consumption, meanwhile, still remains relatively subdued.
However, policymakers and advisors to the government are also aware of the challenges. “With such welfare or cash handout schemes, these are not one-time measures. If the government has to withdraw such a scheme, there will be political ramifications. So that consideration has to be weighed against the fiscal realities,” said a second person aware of the developments.
Both sources said the outlay and finer details of a cash-transfer scheme are still being discussed. Inputs from the Prime Minister’s Office will play a big part in whether the scheme makes its way to Sitharaman’s budget speech or not.
Recently, the Maharashtra government announced a cash transfer scheme of Rs 1,500 per month for eligible women in the 21-60 age group. The outlay for that state’s government would be Rs 46,000 crore.
Earlier, in March, the Delhi government announced the Mukhyamantri Mahila Samman Yojana, under which every woman over 18 years will receive an honorarium of Rs 1,000 a month. The scheme will exclude taxpayers, beneficiaries of government pension schemes and government employees.
Eight other states, ruled by governments cutting across party lines, operate similar schemes, including Tamil Nadu, Assam, Himachal Pradesh, West Bengal, and Karnataka, whose five “guarantees” included financial assistance of Rs 2,000 every month to eligible women.