Is There Such A Thing As A "Direct" Cash Transfer? [Dec. 2014]

Authors

Vivek Srinivasan, Program Manager, Program on Liberation Technology, CDDRL, Stanford University

Rajendran Narayanan, Cornell University

Sai Chand Chintala, Society for Social Audit, Accountability and Transparency

Dipanjan Chakraborty, IIT Delhi

Rajesh Veeraraghavan, University of California, Berkeley

Vibhore Vardhan, University of California, Berkeley

Abstract

In this article, we focus on three forceful arguments that have been made in favour of “direct” cash transfers: One, cash can be delivered directly to the beneficiaries by removing many layers of intermediaries that are typically involved in delivering other benefits such as subsidised food in the Public Distribution System. It has been argued that since intermediaries are often corrupt, transferring cash directly to beneficiaries will eliminate corruption. Two, technology could be used at all steps of the transfer of benefits and thus we can track the flow of money from start to end, which will make the flow of cash entirely transparent. Three, direct transfers are instantaneous. These arguments have been used by proponents to build support for direct cash transfers alternative to other forms of benefits transfer. We examine these claims empirically.