Impact Evaluation of Cash Transfer: Case Study of Agriculture, Telangana

With Unconditional Cash Transfers in Agriculture emerging as a significant policy instrument in India in recent years, evaluating such interventions has become imperative and policy relevant. This study aims to estimate the causal impact of one such program implemented by the state of Telangana in 2018, on the agricultural input spending. This study uses the data from National Sample Survey’s 77th round which is a nationally representative survey conducted in 2018-19. The analysis applies propensity score matching combined with inverse probability weighting method to estimate the causal impact of the cash transfer program. The findings from the study suggested a 36 percent raise in agricultural input spending for the average treatment effect estimate that is highly significant and can be traced to the cash transfer program. Additionally, after accounting for the selection bias, the average treatment effect on the treated estimates reveals a highly significant 18 percent increase in the input spending by the farmers. The results further suggest that the intervention shifts expenses away from imputed labour toward paid labour, and facilitates increased use of fertilizers.