Concerns Over Financial Stability Due to Women-Centric Schemes

The State Bank of India (SBI) has recently highlighted the financial instability caused by women-centric Direct Benefit Transfer (DBT) schemes in various states. These initiatives, aimed at providing direct cash benefits to women, especially around election periods, are putting a significant strain on state budgets.

According to the SBI report, the total expenditure on these schemes across eight states has exceeded Rs 1.5 lakh crore, consuming 3-11% of these states' revenue receipts. This massive spending is described as a "tsunami" of welfare expenditure, with some schemes suspected to be electoral tactics in disguise.

Examples of Financial Strain Across States

States like Odisha are in a better position to fund these programs due to higher non-tax revenues and no borrowing requirements. However, other states face considerable fiscal risks. For instance, Karnataka's Gruha Lakshmi scheme, offering Rs 2,000 monthly to female heads of households, costs Rs 28,608 crore annually, which is 11% of the state's revenue receipts.

Similarly, West Bengal’s Lakshmir Bhandar scheme, providing a one-time Rs 1,000 grant to women from economically weaker sections, amounts to Rs 14,400 crore, or 6% of the state’s revenue receipts. Delhi’s Mukhyamantri Mahila Samman Yojana, which allocates Rs 1,000 per month to adult women (excluding certain categories), requires Rs 2,000 crore annually, or 3% of its revenue receipts.

Potential Ripple Effects and Recommendations

The SBI report also warns of potential ripple effects, suggesting that the central government might face pressure to introduce similar schemes. It recommends adopting a universal income transfer scheme, with matching grants from the center to states, to significantly reduce several market-disturbing subsidies.

While these schemes aim to empower women and attract electoral support, the report emphasizes the necessity for states to carefully evaluate their fiscal health and borrowing practices. It also points out the importance of a holistic assessment of welfare spending to ensure long-term financial stability.