Direct cash transfer better option than other anti-poverty schemes: Planning Commission

December 1, 2013

According to a study by the Planning Commission, the cost of bringing all households above the poverty line would have been Rs. 55,744 crore during 2011-12 if cash transfers were used instead of anti-poverty schemes. This would have been sufficient to plug the poverty gap and would be just a fraction of annual anti-poverty budget instead of initiating new anti-poverty schemes.
As per the analysis by the Planning Commission:

Of Rs. 55,744, Rs 42,932 crore would have had to be transferred to the below poverty line households in rural areas and the rest Rs 12,812 crore to those in urban areas.
In 2011-12, the UPA government had spent Rs 72,822.07 crore on food subsidy. The expenditure in the same year on the UPA’s seven flagship schemes was Rs. 1,09,379 crore.
This cost is likely to increase as the annual cost of implementing the Food Security Law alone is estimated at Rs 1.2 lakh crore.
The anti-poverty programmes in our country have leakages and is inefficient.

What is Poverty Gap?

Poverty gap is the amount of cash required for a household to lift it above the poverty line. It is the difference in the level of consumption of the households below the poverty line and those on the line.
As per the Tendulkar Committee report, a household of five people in India subsists with a monthly consumption of Rs. 874.50which is the Poverty Line. This poverty line is in proximity to the World Bank Poverty Line of an income of $1.25 a day (on a Purchasing Power Parity basis).

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