SMALL BUT EFFECTIVE: INDIA’S TARGETED UNCONDITIONAL CASH TRANSFERS

India’s approach to social security stresses the provision of subsidized food and public works.
Targeted, unconditional cash transfers are little used, and have been little evaluated. An
evaluation of cash transfers for the elderly and widows based on national household survey
data and surveys on social pension utilization in two of India’s states, Karnataka and
Rajasthan, reveal that these social pension schemes work reasonably well. Levels of leakage
(corruption) are low, funds flow disproportionately to poorer rather than richer households,
and there is strong evidence that the funds reach vulnerable individuals. A comparison to the
public distribution system reveals that the main strength of the social pensions scheme is its
relatively low level of leakage. We hypothesize that social pensions suffer less from
corruption than India’s other safety net programs either because of the low levels of
discretion involved in their delivery, or the small size of the transfers involved. Since we
cannot choose between these two hypotheses, the scaling-up of the social pension schemes,
currently underway, while warranted, should be closely monitored.