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Better solutions for helping India’s poor

Two-fifths of the food rations meant for India’s poorest disappear before they reach the people for whom they’re meant. Huge amounts of basic supplies are siphoned off by officials, ration-shop owners, distributors and others. And many of the 140 million claims each year for bottled cooking gas are made by ‘ghost’ recipients created by black-market traders.

Now some observers are saying that instead of handing out food or subsidised fuel, India’s government would do better to give the poor money. In the past, this has been an impractical solution, because many of India’s 1.2 million people lack proper identification, let alone bank accounts. However, a huge new project is underway to log Indians biometrically onto a central database. If all goes well, by the end of 2014, 600 million Indians will be enrolled on the new system.

This would allow for the creation of large-scale cash-benefit programmes. Cash transfer schemes have been very successful at tackling poverty and malnutrition in other countries. Often, monthly cash payments are linked to families ensuring that children receive inoculations and regular health-checks, or that older children are consistently attending school.

A few such ‘conditional’ schemes have already been tried in India. For example, the Janani Suraksha Yojana scheme, launched in 2005, pays women to give birth in hospital. Women below the poverty line or those living in ten states which perform badly for infant and maternal deaths, are given around 26 dollars for going to hospital and a smaller amount for having a nurse at a home birth. Almost 11 million women took advantage of this scheme last year and it is credited with helping to bring down maternal mortality rates (which reduced to 200 deaths for every 100,000 live births in 2010, compared with 280 deaths in 2005). Another scheme rewards women who go for prenatal check-ups and who ensure their babies are immunised.

According to a special feature on the issue of how best to help India’s poor in The Economist, the country’s prime minister, Manmohan Singh, has committed his government to widening cash transfer programmes and paying directly into beneficiaries’ bank accounts through electronic means. Though some in India have argued that the poor may not spend money wisely, pilot studies have showed that families receiving payments often eat much better than when they are on food rations. The journal therefore urges Mr Singh to press ahead with transforming benefits for the poor, by changing from subsidies on items such as fuel and food, to cash transfer payments.

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