Cash transfers: Show me the money!

Few topics have attracted as much attention—but also confusion—as the government’s recent thrust to transition India’s creaky, product-centered subsidies to a system of electronic, direct cash transfers. In some quarters they are (wrongly) seen as a panacea to all our current ills—expected to result in significant fiscal savings, better identification of the poor, while simultaneously boosting consumption. In other quarters, they are simply seen as a political gimmick that will necessarily result in more inflation.

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