India's economic survey flags growing risks from cash handouts
India's latest Economic Survey, out today, warns that unconditional cash transfers (UCTs) are rising fast—hitting ₹1.7 lakh crore in FY26 and with the number of states implementing UCT schemes having increased more than fivefold between FY23 and FY26—even as around half of the states implementing UCT schemes are estimated to be in revenue deficit.
Why does this matter?
A big chunk of these cash transfers goes directly to women: for female casual workers, UCTs make up 11-24% of their monthly income, and for some self-employed women, it's as high as 87%.
For many rural families, UCTs cover nearly half their monthly spending.
But this rapid growth is straining state budgets—UCTs now eat up to 8% of state budgets and have pushed fiscal deficits higher.
What's the way forward?
The survey suggests making cash transfers smarter—not just bigger.
It recommends tying payments to things like school attendance or health check-ups (like Mexico and Brazil do), instead of handing out money with no strings attached.
Research shows that while UCTs help people spend more in the short term, they don't always lead to better nutrition or education unless paired with other support.