Gruha Lakshmi: Despite Flak, Karnataka Cash Transfer Scheme is a Powerful Tool to Empower Women

Led by the BJP, there has been a lot of criticism against welfare schemes involving the transfer of money or free goods. But, research from around the world, and from across India, shows that cash transfers act as a viable redistributive strategy.

The Karnataka government launched the Gruha Lakshmi scheme last month, fulfilling one of its significant pre-poll promises. This unconditional cash transfer programme would provide women heads of households Rs 2,000 in their bank accounts every month. The state government claims it to be the largest cash transfer scheme in the country introduced across 5,5000 panchayats in the state with a coverage of 1.9 crore women, who are already enrolled for the scheme. The Gruha Lakshmi scheme comes close on the heels of other social protection schemes introduced by the newly elected Congress government in Karnataka.

The opposition Bharatiya Janata Party (BJP) asserts that the implementation of these schemes will make the state bankrupt. This is not the first time that the Union government has expressed its disapproval of welfare schemes involving the transfer of money or free goods. Dubbing welfare schemes as “revadi culture”,  or in other words, ‘freebies’, is a disguised attack by Prime Minister Narendra Modi, time and again, against BJP’s political opponents in various states. However, the allegations of fiscal imprudence does not stand the test of objectivity.

Also read: Karnataka Becomes an Accidental Pioneer of Cash Transfers for Food

For instance, despite the implementation of several welfare measures by the Aam Aadmi Party (AAP) government in Delhi, it has been shown that for the period 2013-14 to 2017-18, there was a reduction in the percentage of public debt to the Gross State Domestic Product (GSDP) from 7.23% to 4.89% respectively.

Notwithstanding the uncritical political slandering by the Union government, an argument can be made that an objective and nuanced understanding of the social objectives behind cash transfers is needed, especially when they are targeted towards a particular sub-section such as women. This should be done in the light of context-specific realities of women in Karnataka, embedded in a socio-political and cultural context.

The analyses in the subsequent paragraphs will illuminate why affirmative action through cash transfers is a viable redistributive strategy and the specific role that cash transfers could play in women’s lives in terms of reducing physical violence and empowering them.

Cash transfers as a tool for affirmative action

A concern that has been raised in policy circles regarding cash transfers is that it may be a step towards state withdrawal from many essential services such as food, nutrition, health, and education. However, in the context of the recently introduced welfare schemes by the Karnataka government, cash transfers through Gruha Lakshmi scheme is supplemented with in-kind distribution of commodities and services. For instance, the Sakthi scheme provides free transport to all women, irrespective of their economic class, to travel in non-premium state buses and the Gruha Jyoti scheme provides up to 200 units of free power to households in Karnataka.

Cash transfers to women can also be justified on the grounds of social injustices and economic marginalisation faced by women. The Global Gender Gap Report 2023 shows that, in the criteria ‘Economic Participation and Opportunity’ (includes indicators like labour-force participation rate, wage equality for similar work, earned income etc.), India has achieved only 36.7% gender parity.

Historically, improvement in women’s labour force participation has been linked to a decrease in their unpaid domestic and care work or when such work is made more compatible with market work. However, evidence suggests a highly unequal distribution of unpaid domestic work between men and women, with women spending 7.2 hours on such work when compared to only 2.8 hours spent by men in a day, thwarting attempts by women to engage in paid work.

Representative image. Haribai, an MGNREGA worker of Lalitpur in Uttar Pradesh, waits at a bank to collect her earnings. Photo: Photo: UN Women/Gaganjit Singh/ Flickr (CC BY-NC-ND 2.0)

In light of such evidence, cash transfers can alleviate the distress of economic insecurity faced by women and should be considered as a viable affirmative remedy. Besides, such transfers to women are also a way of creating discourse in the community that there is nothing ‘natural’ about the work that women do in the private sphere of the family and that housework also deserves recognition.

Cash transfers and women’s labour force participation

It is feared that unconditional cash transfers to women will re-enforce gender stereotypes and keep women away from seeking paid employment and further entrench them in household work but such concerns are often misplaced.

The Initiative for What Works to Advance Women and Girls in the Economy (IWWAGE) shows that Karnataka has the highest rate of female labour force participation (LFPR) in India. A small transfer of Rs 2,000 is unlikely to have any significant impact on their incentives to work. A disaggregated analysis of the distribution of women workers in Karnataka by status of employment reveals that a majority of rural women are engaged in self-employment and casual labour. Around 67% of self-employed women are working only as unpaid workers in family enterprises in rural areas.

Also read: Instead of Withdrawing Food Security, a Minimum Income Guarantee Is Needed

For the urban employed women, regular salaried jobs were most common but nearly 62% of such jobs were without any written job contract pointing to the precarity of such jobs. Women are also more prone to job losses and less likely to fall back on new employment arrangements during economic shocks, as was observed during COVID-19. Hence, cash transfers can be a supplementary source of income to women as many are involved in non-paying, low-paying and precarious jobs.

Cash transfers and domestic violence against women

It has also been reported that cash transfers to women have reduced intimate partner violence (IPV) against women. The evidence seems to suggest the critical role of poverty and economic insecurity as triggering factors for domestic violence.

In Karnataka, 44% of married women have experienced spousal violence as per the National Family Health Survey-5 (NFHS) report for Karnataka. It is the highest among Indian states. The state has also witnessed the highest increase in domestic violence from the previous NFHS-4 round. This paints a grim picture of gender-based violence in the state. If cash transfers help to reduce domestic violence as suggested in several studies, it would be a huge step forward towards gender justice.

Cash transfers as pathways to women empowerment

An important indicator to understand women’s empowerment, among several others, is household decision-making, ranging from what to cook, when to take a child to a health centre, to major purchase decisions in the household. Women are economically empowered only if they have control over the use of resources. However, restrictive gender norms and household dynamics often come in the way.

Women working on an NREGA site building a pond in Gopalpura, Jhabua, Madhya Pradesh. Credit: UN Woman/Gaganjit Singh/Flickr CC BY-NC-ND 2.0

Representational image. Photo: UN Woman/Gaganjit Singh/Flickr.

A study by Yale University analysing the empowerment effects, in the context of the rights-based employment guarantee programme (MGNREGA), showed that direct deposits of wages into women’s accounts had a positive impact in shaping liberal attitudes towards work and in their engagement with paid work. Gruha Lakshmi scheme is designed in a way that women directly receive the money into their Aadhar-linked bank accounts, thus, enabling them to have greater control over the use of resources.

Also read: The Evolution of India’s Welfare System, 2008 to 2023

It is also important to recognise the potential role of cash transfers in empowering women in Karnataka, especially at a time when the state has regressed on this front. There is a drop in the percentage of ever married women who participate in household decisions (including health care for oneself, making major household purchases and visits to family or relatives) from 82.7% to 80.4% and Karnataka is one of the worst-performing states.

Between NFHS-4 and NFHS-5, there is a huge drop in the percentage of women who engaged in any form of paid work from 37% to 29%. However, women having mobile phones they themselves use increased from 47.1% to 61.8%. This may augur well for the successful implementation of the Gruha Lakshmi scheme, provided adequate financial and digital literacy is provided to women to operate their mobile-linked bank accounts.

On the whole, the Congress government’s welfare scheme Gruha Lakshmi is a welcome step. It can be seen as the recognition of women’s contributions and the hope is that the financial support would improve their economic position, enable them to make household decisions and participate in public life. However, this comes with a caveat. It is not enough that cash reaches the bank accounts of women; the financial infrastructure of the state should ensure easy accessibility. As was reported during the COVID-19 pandemic, there can be rejections while accessing payments with no clear reason, necessitating multiple visits to banks. Such glitches should be avoided given that Indian women are faced with time poverty.


Divya Pradeep teaches Economics at CHRIST (Deemed to be University), Bangalore.