Agriculture Reference
In-Depth Information
covers 25% of Mexican population. The success of the program in achieving the desir-
able impact at a reasonable cost has made 30 other countries emulate it.
Another very successful conditional (on regular school attendance by children) cash
transfer program that is being copied everywhere is Brazil's Bolsa Familia. It is similar in
structure to Mexico's PROGRESA. A debit card is issued preferably to a female head of a
family whose income is below poverty level. The program has been found to be success-
ful in many dimensions. It is well targeted: 80% of the benefits go to the poor. In 2006,
it cost only 0.5 % of the Brazilian gross domestic product (GDP) and covered 11.2 mil-
lion families. It is credited to have had significant impact on poverty as well as income
inequality in one of the most unequal countries (Ravallion 2011).
We have discussed only a few country studies. Unfortunately, we have no systematic
comparative studies that would allow us to pass a definitive verdict on the relative merit
of cash and in-kind transfers of food subsidy. However, it would not be unfair to claim
that cash transfers tried across the world are administratively cheaper to implement and
are used by the recipients mostly for legitimate uses. Several countries have used them
successfully, and more and more countries are following suit.
Opposition to Cash
Transfers: Interests and Ideology
Despite the available evidence and a persuasive case for cash transfers, there seems to be
a strong reluctance among politicians as well as civil society activists to move away from
in-kind transfers. Why? As far as the politicians are concerned, we cannot discount
vested interests. In India, this is best illustrated by the power of the grain procurement
lobby.12 It also consists of the local politically connected interests that run the ration
shops and make huge profits by diverting subsidized grain to the open market. Indeed,
it is the prospect of such profit that leads the bulk of ration shops to be cornered by local
politicians or their cronies.
We believe that there may also be subtler factors influencing the motivations of pol-
iticians. For example, subsidizing the essentials of subsistence is powerfully symbolic
in keeping alive the conscience of an otherwise unjust society. After all, food subsidies
were not constructed as technocratic solutions to malnutrition and hunger but as one
of the important means to pacify the poor multitudes. Their historical origins explain
why paternalism sits so well with food subsidies. It may also explain why politicians long
accustomed to being arbiters of food prices may be reluctant to embrace the unknown
political potential of cash transfers.
Civil society activists and especially those groups advocating and working to expand
the rights of the poor—for food, health, education, and other public services—have
opposed cash transfers for the most part. Their steadfast commitment to in-kind
transfers is deeply ironical. A tool of social pacification is held up as a radical means
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