The political cost of unconditional cash transfers
This article examines the political and economic implications of Unconditional Cash Transfer (UCT) schemes in India. It highlights the tension between using these programs for electoral support and the fiscal challenges they pose to long-term development.
Why it matters
It addresses the effectiveness of welfare-based electoral strategies and the difficulty of balancing social support with fiscal responsibility.
Since 2020, Unconditional Cash Transfer (UCT) schemes have become an important electoral strategy in India, particularly to attract women voters. Some examples of such schemes include the Kalaignar Magalir Urimai Thittam in Tamil Nadu, the Lakhsmir Bhandar in West Bengal, and Gruha Lakshmi Yojana in Karnataka. Yet, despite increasing the amount of cash before the 2026 elections, some governments which implemented these schemes were defeated. One possible explanation for the loss could be the political cost associated with UCTs.
UCT schemes are well-intentioned as they provide financial support to women. They partially advance SDG (Sustainable Development Goal) 5.4, which calls for a recognition of women’s unpaid domestic and care work. According to the Ministry of Finance’s latest Economic Survey, States are expected to spend about $18 billion on UCTs in 2025-26, much of it targeted towards women.
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