NYAY Scheme: Significance of Cash Transfer Schemes

Synopsis: Congress has promised the revival of the NYAY scheme in its Kerala manifesto. This cash transfer scheme could have been beneficial during the lockdown.


The NYAY Scheme has become more relevant in today’s age and time of the Pandemic crisis.

  • This scheme offers a monthly transfer of ₹6,000 to homes living below the poverty line. This unconditional cash transfer to the poor is a good idea.
  • Cash transfers lead to important short-term effects such as better nutrition, less food insecurity, higher consumption.
  • Other benefits of cash transfer according to research are it can totally transform people’s futures, unlock blocked entrepreneurship, investment etc. It could lead to a bearable exit from poverty. Cash transfers are a powerful tool for sustainable poverty reduction.
Why a scheme like NYAY is important in the present times?

The need for NYAY has only become stronger after the COVID-19 pandemic. Also, rural-urban migrants faced hardships during the lockdown, followed by the economic slowdown.

  • Firstly, if an NYAY-like scheme during the lockdown, could have helped migrant workers to remain where they were, after losing their job. Further, it could have helped companies to restart activity easily once lockdown was lifted.
  • Secondly, Ideas42 is non-profit behavioural science research and design firm. It experimented with the benefits of cash transfers on 2 types of people in Africa:
      1. The one’s who just received cash transfers.
      2. Others, who along with the cash transfers, also were trained with some (Nudge tools) behavioural methods. These methods were directed towards setting long-term goals, saving more and making productive investments.
    • After the pandemic, ideas42 interviewed both the recipients. Everyone stated a loss of income and also told that the cash they had received helped them cope. However, the people that received the “nudge” tools did better because they saved more.
    • Even during a pandemic, cash transfers helped people feel in control, and adding behavioural tools increased the cash’s impact on people’s well-being.
  • Thirdly, a state-level implementation of a scheme like NYAY helps the necessary fixing out of logistical challenges.
  • Fourthly, it also allows for strategically including ‘nudges’ and other proven involvements that can help increase the effect of cash transfers.
The conclusion
  • Such involvements can help ensure that people receiving cash are able to meet their immediate needs. Also, they are able to set some money aside for emergencies, such as the pandemic or natural disasters.

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