To accelerate the poverty reduction process in India, I propose a reform initiative, ‘Sahay’. It is aimed at launching a comprehensive program via cash transfers to stimulate and accelerate poverty reduction in the country. Moving away from the paternalistic mentality, ‘Sahay’ would be an unconditional direct cash transfer. Proposal includes reallocating all the funds from NREGA, PDS and deregulation of kerosene prices in next three years. As the first step toward agricultural reform, fertiliser subsidies also will be replaced with conditional cash transfer to farmers. There are ideas to reduce the cost of production of fertilisers in India by achieving the savings. The transition is expected to take three to five years. Without any changes to the current tax structure and only with the reallocation, ‘Sahay’ can raise ` 89,000 crores per annum in the next three years. The policy has comprehensive recommendations towards every step of implementation of this cash transfer. A new department called “Ministry of Social Department” will be created while Fertilisers industry will see the closure.
‘Sahay’ will use the existing infrastructure in as many places as possible and is closely linked with Aadhar. The project has clear goals for the end of three years, which will be monitored at the end of every year. Usual problems of targeting, payment options will be met with modern IT infrastructure and by enabling existing databases. Completely electronic payment option will reduce the leakage to minimum. All the possible policy dilemmas have been discussed with solutions in the policy. Agricultural reforms as well as school voucher can be augmented once ‘Sahay’ is on a stable and consistent path. There will be serious roadblocks from powerful lobbies of PDS, Kerosene and NRGEA unions.
Vikas Argod actively volunteers at IndiaGoverns Research Institute, a Bangalore based public policy data analysis organization. He works for a business data analysis company in Pittsburgh, US. Views expressed here are personal.
(The above piece was written by Vikas in April 2012, as a student of The Takshashila Instution.)