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The Tsunami of the women centric Direct Benefit Transfer schemes announced by various states can bleed the state finances, says a report by State Bank of India . Budget with ET Budget 2025: A CFO’s playbook for operational excellence and long-term growth Rising Bharat may need to take center stage for India’s game-changing plans Will Indian Railways accelerate to global standards with govt’s budgetary allocation? These schemes, which aim to transfer cash directly to women, have gained momentum in recent years, particularly in the run-up to elections. However, the report warned that such initiatives could significantly impact state finances.
It said "there is a Tsunami of women centric schemes unleashed by multiple states offering direct benefit transfers (some badly guised as pure electoral realpolitik, we believe) that can bleed select states' finances" The report highlighted that the total cost of these schemes across eight states has now crossed a staggering Rs 1.5 lakh crore, accounting for 3-11 per cent of these states' revenue receipts. The report added that while some states, like Odisha, are better positioned to bear these costs due to higher non-tax revenues and no borrowing requirements, many others might face fiscal challenges.
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The SBI report also noted that with the growing trend of promising income transfers to women, even the central government might feel pressured to adopt similar policies. It suggested that a universal income transfer scheme , with matching grants from the Union government to states, could be a more sustainable alternative to the current approach. This, the report argues, could also help reduce market-disrupting subsidies.
While these schemes are seen as a way to empower women and gain electoral support, the report urges states to consider their fiscal health and borrowing patterns before implementing such welfare programs. It added "It would be worth taking course to adopt a universal income transfer scheme (matching grant from center to states) towards substantially reducing several market disturbing subsidies" A holistic view of welfare spending and its long-term impact on state finances is essential, the report concluded. (You can now subscribe to our Economic Times WhatsApp channel ).
