Unconditional cash transfers putting State finances at risk, Economic Survey 2025-26 warns

Economic Survey 2025-26 warns unconditional cash transfers risk state finances, impacting fiscal sustainability and medium-term growth.

In a year when four major States are going for Assembly elections, only one of which is ruled by the Bharatiya Janata Party (BJP), the Economic Survey 2025-26 has come out strongly against “unconditional cash transfers” (UCT), including to women. It highlighted that while these have short-term gains, they also raise concerns about fiscal sustainability and medium-term growth.

Notably, last year’s edition of the Survey had noted that cash transfers and loans to targeted poorer and lower-income households were having positive effects on consumption, allowing these households to fund various basic needs and debt repayments.

West Bengal, Tamil Nadu, Kerala, and Assam are going for elections in 2026, as is Puducherry.

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The Survey noted that aggregate spending on UCT programmes, particularly for women, is estimated at about ₹1.7 lakh crore for the current financial year 2025-26. It added that the number of States implementing them increased more than five-fold between 2022-23 and 2025-26, with around half of them estimated to be in revenue deficit.

The Survey further cited a study that estimated that such transfers amounting to 0.19-1.25% of the gross state domestic products of States and 0.68-8.26% of their total budgetary expenditures.