Delhi Election: SBI Report Warns Of Financial Strain From Women-Centric DBT Schemes

A report by the State Bank of India warns that the growing number of women-centric Direct Benefit Transfer (DBT) schemes introduced by various states could severely strain state finances.

These initiatives, aimed at providing cash directly to women, have gained significant traction, particularly ahead of elections. However, the report cautioned that such schemes could have a major impact on state budgets, reported ANI.

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It stated, "There is a Tsunami of women-centric schemes unleashed by multiple states offering direct benefit transfers (some badly disguised 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 surpassed an eye-watering Rs 1.5 lakh crore, which constitutes 3-11 per cent of these states' revenue receipts.

The report also noted that while some states, such as Odisha, are better positioned to absorb these costs due to higher non-tax revenues and no borrowing needs, many others may struggle with fiscal pressures.

It added, "Some states have the capacity to pay for such schemes; for instance, Odisha has higher non-tax revenue, thus no borrowing."

For example, Karnataka's Gruha Lakshmi scheme, which offers Rs 2,000 per month to the female head of a household, has a budget allocation of Rs 28,608 crore, making up 11 per cent of the state's revenue receipts.

Similarly, West Bengal's Lakshmir Bhandar scheme, which provides a one-time grant of Rs 1,000 to women from economically disadvantaged backgrounds, costs Rs 14,400 crore, or 6 per cent of the state's revenue receipts.

Delhi's Mukhyamantri Mahila Samman Yojana, offering Rs 1,000 per month to adult women (excluding certain categories), amounts to Rs 2,000 crore, or 3 per cent of revenue receipts.

The SBI report also pointed out that with the increasing trend of promising income transfers to women, the Centre may feel pressured to adopt similar measures.

It suggested that a universal income transfer scheme, supported by matching grants from the Union government to states, could be a more sustainable option than the current model. This, the report argued, could also help reduce disruptive market subsidies.

While these schemes are seen as a means of empowering women and gaining electoral favour, the report urges states to carefully consider their fiscal health and borrowing capabilities before rolling out such welfare programs.

It concluded, "It would be worth taking the course to adopt a universal income transfer scheme (matching grant from center to states) towards substantially reducing several market-disturbing subsidies."

A comprehensive assessment of welfare spending and its long-term effects on state finances is essential, the report concluded.