A case for cash transfers

The revival of the NYAY scheme in Congress’s Kerala manifesto is a welcome step

The Nyuntam Aay Yojana (NYAY) has become more relevant since it was first proposed two years back. By resurrecting it in its Kerala manifesto, the Congress has an opportunity to make the idea even more robust. Even the best policy proposals find it hard to survive an unsuccessful election campaign. So, it was unexpected to see a version of NYAY, the Congress’s flagship 2019 scheme that proposed a monthly transfer of ₹6,000 to households living below the poverty line, resurface prominently in the Congress-led United Democratic Front’s manifesto for the Kerala Assembly election. Unconditional cash transfers to the poor is a resoundingly good idea. Of course, cash transfers lead to important short-term effects: better nutrition, less food insecurity, higher consumption, and so on. But their benefits extend beyond this. Research shows that by freeing people from being held hostage to hunger and insecurity and anxiety about basic needs, even a modest cash transfer can radically transform people’s futures, unlocking stymied entrepreneurship, investment, and eventually a sustainable exit from poverty. It is hard to dream and plan on an empty stomach, and cash transfers help ease that problem. They are, thus, a powerful instrument for sustainable poverty reduction.