Direct Cash Transfer Scheme will Strengthen the Market Forces

Press Release

The UPA government has come out with the direct cash transfer scheme with a great fanfare. As per this scheme the money will be transferred directly into the bank accounts of the beneficiaries i.e. poor of the country. Food grains, kerosene, LPG subsidies, pension payments, scholarship and employment guarantee scheme payments as well as benefits under other welfare programs will be made directly to the intended people. The cash provided under this scheme can then be used to buy goods/services directly from the market. For example, in case the government abolishes the subsidy on LPG or kerosene and still wants to give some subsidy to the poor, the subsidised amount will be transferred as cash into the bank account of the beneficiaries.

The Socialist party terms this scheme of the UPA government as ‘go to market’ scheme. By the logic of ‘market socialism’, the rich keep rushing to the market, so should the poor!! The government, under the neoliberal reforms has put a lot of thought, effort and money to envisage this scheme. Naturally, plenty of money will also be spent in its implementation. But the ‘reform-loving’ Government is not ready to reform and re-strengthen the existing PDS scheme which would be in the best interest of the needy. There is reason behind this choice. For the last two decades or more, the government of India has been blindly imposing the neo-liberal reforms without caring about its disastrous impact on the vulnerable sections of society. The Indian state has abandoned its welfare character while obeying the dictates of the World Bank (WB), International Monetary Fund (IMF), World Trade Organisation (WTO) and various foreign and India multinational companies and corporate houses. The government is not at all motivated by the Directive Principles of the Constitution, nor by the socialist goal enshrined in the Constitution that would benefit Gandhi’s last man.

Thus, the erstwhile welfare schemes such as PDS are being replaced by market friendly/oriented schemes such as the direct cash transfer scheme. The present day government is inspired by the philosophy – of the corporate, by the corporate and for the corporate.

The Prime Minister has stated time and again that inflation and price rise are inevitable to achieve a higher growth rate. According to this theory how is it possible that a certain fixed amount of cash would help the beneficiary in purchasing goods like grains, Kerosene, LPG etc. in inflation conditions and ever rising prices? Again, there is no certainty that the beneficiary would buy the same goods for which money is given. They may purchase liqure or sub standard consumerist items at the cost of hunger and malnutrition of family members, particularly children and women. In other words, it would enhance consumerism, thus strengthening the market forces.

The argument that this scheme will stop leakage is also not tenable. Even in the existing governmental schemes aimed in this direction, the would-be beneficiaries are forced to bribe officials to get a part of the amount. Also, only Adhar card holder will get cash transfer. As of now, only 21 crore of the 120 crore people have Adhar cards. Most BPL families don’t have bank accounts and large number of villages don’t have bank branches. The argument that the scheme will spread financial literacy among rural folks and equipped them with management skills is a far fetched dream. The scheme is designed to deny the due of the hard working masses so that the rich-oriented growth could flourish without any protest and challenge.  

The government’s decision seems to be impelled by two goals, one, winning over the poor voters and two, to put an end to subsidy. The first goal is detrimental to the spirit of democracy and second is in tune with the dictates of the WB. In other words, the scheme is a ‘land mark step’ but in the direction of market forces. It could prove to be a ‘game-changer’ but for the UPA II in the next general elections to be held in 2014 or earlier.

The parties opposed to this scheme should also realise the threats presented by  the neo-liberal regime of which this scheme is a by-product. The Socialist Party is opposed to this scheme because it is opposed to the ideology/system of neo-liberalism and supports socialism.