Correspondent: Murali Krishnan
Speakers: Jean Dreze, development economist; Anjali Bharadwaj, social activist; Kavita Srivastava, convener of Right to Food Campaign; Kusum Lata, Bathi Ram, villagers
KRISHNAN: Kusum Lata, a villager from Alwar district in Rajasthan feels cheated. She was told by the fair price shop dealer last year that she would not get kerosene at a subsidized rate anymore. As part of the cash for kerosene scheme, she would have to buy kerosene at the market price and the subsidy would be transferred into her bank account.
But a year later, Kusum Lata, who is in Delhi to protest against the direct cash transfer scheme, claimed that she is yet to receive any subsidy and is back to cooking with firewood because she can no longer afford kerosene.
KUSUM: The government made this grand announcement of cash transfers. It simply won't work. The government promised to deposit money in our accounts. Nothing has happened. What will illiterate women like me do?
KRISHNAN: Like Kusum Lata, thousands of impoverished families from 12 Indian states converged in the capital, Delhi to protest against a controversial cash transfer program.
Under the terms of the scheme introduced, buying food, fuel and fertilizer at discounted rates from a government shop, Indians in possession of scheme identity cards are supposed to be paid cash by the government to buy goods at market prices.
Jean Dreze, a development economist who has been influential in Indian economic policymaking says poor people indeed prefer food grains over cash transfers.
DREZE: You know it is not easy to implement cash transfers. And in contrast we have in place a Public Distribution System where we have ration shops in all villages in India and that system can be activated immediately to provide food security for people.
KRISHNAN: Proponents of the system claim cash transfers are a magic bullet to fight poverty as it will improve efficiency and reduce large-scale corruption.
But there are those who claim the scheme, which has yet to be rolled out across much of the country, causes more problems than it solves.
Anjali Bharadwaj, a social activist explains why.
BHARADWAJ: Entitlements like food must not be made into cash transfers. Because given the current levels of inflation which are very high, it is impossible virtually to keep calibrating the amount of money the government gives to provide them a certain amount of food security.
KRISHNAN: Instead, protesters want a National Food Security Bill enacted that would provide foodstuffs and other basics directly to those in need.
DREZE: The government should redeem its promise to enact a food security act in the country which goes back four years and nothing has been done so far. In fact the Bill has been pending with the standing committee of parliament for a full year.
KRISHNAN: This ambitious scheme proposes to universalize the public distribution system, provide oil and pulses apart from food grains and adequate amounts of maternity entitlements and pensions for the elderly.
The government has labeled the direct cash transfer of subsidies as a political game changer. It hopes to roll out the scheme in 51 of India's 659 districts from January 2013, to be gradually extended to the rest of the country by April 2014. It has also ordered banking and technology infrastructure improvements to enable the new mechanism to function.
But Bathi Ram a farmer from the central state of Madhya Pradesh says it won't work.
RAM: These cash transfers work are only for those who are educated. Poor and illiterate people like us cannot avail government subsidies. I prefer kind to cash.
KRISHNAN: Kavita Srivastava, the national convener of the Right to Food Campaign (RFC), a network of grassroots organizations spread across the country says the way out is to strengthen the public distribution system or PDS.
SRIVASTAVA: Let the system of PDS continue. Reform ought to be done. There are problems. Move towards reforming and strengthening the PDS rather than this whole business of finishing off PDS and converting cash for food and cash for kerosene.
KRISHNAN: For now, the government still remains firm with its rollout of cash transfers. It is proposed that the cash equivalent of all subsidies such as kerosene, cooking gas, food, fertilizer, scholarships and old-age pensions will eventually be transferred directly to bank accounts of all genuine recipients.
The jury is still out on whether cash transfer will work in India the way it has done in many countries.