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Cash vs. in-kind transfers: Indian data meets theory

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  • Khera, Reetika

Abstract

This paper uses qualitative and quantitative data from a survey of over 1200 rural households in nine Indian states to explore the arguments for and against cash and in-kind (in this case, food) transfers. When respondents were asked to think about, argue, and ‘choose’ between the two, two-thirds of the respondents expressed a preference for food. Rather than the choice made by respondents, the focus here is on understanding the reasons behind their choice, as explained by beneficiaries themselves. Two main findings emerge. First, some arguments corroborate existing theory (e.g., paternalism, fungibility), but others (e.g., self-control, transition costs) are not incorporated in existing theory on the advantages of in-kind transfers. Second, context is important. Most importantly, respondents’ reported preferences were associated with the benefits they were experiencing under the status quo: where the PDS performed better at distributing food, respondents were more likely to report preferring food to cash transfers. The contention of traditional theory that cash is superior fails to factor in contextual concerns.

Suggested Citation

  • Khera, Reetika, 2014. "Cash vs. in-kind transfers: Indian data meets theory," Food Policy, Elsevier, vol. 46(C), pages 116-128.
    • Handle: RePEc:eee:jfpoli:v:46:y:2014:i:c:p:116-128
    DOI: 10.1016/j.foodpol.2014.03.009
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    5. Miller, Stephen M. & Neanidis, Kyriakos C., 2015. "Demographic transition and economic welfare: The role of in-cash and in-kind transfers," The Quarterly Review of Economics and Finance, Elsevier, vol. 58(C), pages 84-92.
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    8. Tohari, Achmad & Parsons, Christopher & Rammohan, Anu, 2017. "Targeting Poverty under Complementarities: Evidence from Indonesia's Unified Targeting System," IZA Discussion Papers 10968, Institute of Labor Economics (IZA).
    9. David K. Evans & Anna Popova, 2017. "Cash Transfers and Temptation Goods," Economic Development and Cultural Change, University of Chicago Press, vol. 65(2), pages 189-221.
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    11. Berkouwer, Susanna B. & Biscaye, Pierre E. & Puller, Steven & Wolfram, Catherine D., 2022. "Disbursing emergency relief through utilities: Evidence from Ghana," Journal of Development Economics, Elsevier, vol. 156(C).
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    13. Masiero, Silvia, 2016. "Digital governance and the reconstruction of the Indian anti-poverty system," LSE Research Online Documents on Economics 68483, London School of Economics and Political Science, LSE Library.
    14. Tohari, Achmad & Parsons, Christopher & Rammohan, Anu, 2019. "Targeting poverty under complementarities: Evidence from Indonesia's unified targeting system," Journal of Development Economics, Elsevier, vol. 140(C), pages 127-144.
    15. Jyotirmayee Satapathy & Narayan Chandra Nayak & Jitendra Mahakud, 2022. "Do various dimensions of food security affect household welfare differently? An empirical investigation of India's national food security act," Letters in Spatial and Resource Sciences, Springer, vol. 15(3), pages 555-586, December.
    16. Mr. David Coady & Delphine Prady, 2018. "Universal Basic Income in Developing Countries: Issues, Options, and Illustration for India," IMF Working Papers 2018/174, International Monetary Fund.
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    19. Umanath Malaiarasan & R. Paramasivam & K. Thomas Felix, 2021. "Does Food Price Subsidy Affect Dietary Diversity? Evidence from South India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 15(2), pages 268-290, May.
    20. McCorriston, Steve & MacLaren, Donald, 2016. "Parastatals as instruments of government policy: The Food Corporation of India," Food Policy, Elsevier, vol. 65(C), pages 53-62.
    21. Grover, Abhay & Chopra, Shweta, 2017. "298 Factors Affecting Beneficiaries’ Preference for Biannual Distribution of Food Grains in Public Distribution System of Punjab, India," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 8(4), October.
    22. Drèze, Jean & Khera, Reetika, 2017. "Recent Social Security Initiatives in India," World Development, Elsevier, vol. 98(C), pages 555-572.

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    More about this item

    Keywords

    Cash transfers; In-kind transfers; India; South Asia; Entitlements; Philosophical;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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