2 min readJul 8, 2026 06:05 AM IST
First published on: Jul 8, 2026 at 06:05 AM IST
In recent years, several states have introduced cash transfer schemes aimed at women. From the Ladli Behna Yojana in Madhya Pradesh to the Maiya Samman Yojana in Jharkhand and the Magalir Urimai Thogai scheme in Tamil Nadu, these typically involve transfers in the range of Rs 1,000 to Rs 2,500 per month. The quantum of funds channelled through these schemes has increased significantly. In 2025-26, 12 states were estimated to spend Rs 1.68 lakh crore on unconditional cash transfers, as per a report by PRS Legislative Research. To put this in perspective — the Union government allocated Rs 86,000 crore for the MGNREGA in 2025-26.
Unconditional cash transfers have emerged as an instrument of social welfare and empowerment for women, and as an electoral strategy for political parties. A new study — ‘Unconditional Women Cash Transfer Programmes in India’, EAC-PM Working Paper Series — provides evidence to support these. Examining such schemes in Maharashtra and Odisha, it finds that they have led to improvements in consumption and savings of beneficiaries, raising household welfare, with more being allocated for medical, educational and lifestyle purposes. These are welcome trends, and underline the reasons for the spread of such schemes.
Over the last few years, however, concerns have been expressed that as states allocate more resources for such schemes and populist measures such as free electricity, their ability to spend on other areas gets affected. The central bank has echoed these concerns, saying that they “run the risk of crowding out” investments. This shift to cash transfers has also come at a time of mounting disquiet over state finances. As per a report from Axis Bank, the resources for these schemes are garnered through expenditure switching and higher deficits. While the consolidated debt of states has fallen from 31 per cent in March 2021 to 29.2 per cent in 2026 (budget estimates), there is a marked variation across states. For instance, Punjab has a debt burden of 46.4 per cent of the GSDP, West Bengal 38.9 per cent and Bihar 36.8 per cent. “High debt levels, growing contingent liabilities from guarantees and cash transfer schemes pose risks to state finances,” the RBI noted. This requires closer attention.
