Fiscal Pain from Unconditional Cash Transfers for Women Deepens
BJP Ambala workers celebrate victory in Haryana municipal elections (Image credit Haryana BJP)
Twelve states to spend ₹1.68 lakh crore on direct benefit schemes for women in 2025-26; fiscal stress rising despite empowerment goals.
By TRH News Desk
New Delhi, November 4, 2025 — A new analysis by PRS Legislative Research has warned that the growing number of unconditional cash transfer (UCT) schemes for women across Indian states is putting mounting pressure on state finances.
According to the 2025-26 state budgets, spending on such schemes is projected to reach ₹1.68 lakh crore, or about 0.5% of India’s GDP — a sharp rise from just two states running these programs in 2022-23 to 12 states in 2025-26.
These schemes, largely implemented through Direct Benefit Transfers (DBT), provide monthly cash support to women from low-income or targeted groups, aiming to boost their financial autonomy and welfare.
Fiscal Pressure Mounts
While states such as Assam and West Bengal have expanded allocations by 31% and 15%, respectively, the fiscal impact is significant. The PRS report notes that six out of 12 states with active UCT schemes have projected a revenue deficit for 2025-26.
Even states with surpluses show a worrying trend once these schemes are factored in.
- Karnataka, for instance, shifts from a revenue surplus of 0.3% of GSDP to a deficit of 0.6% due to UCT spending.
- Madhya Pradesh’s surplus drops from 1.1% to 0.4% of GSDP under similar adjustments.
RBI Warning and State Responses
The Reserve Bank of India (RBI) in its 2024 report cautioned that rising outlays on subsidies and cash transfers to farmers, youth, and women could strain state budgets and crowd out productive investments.
In response, some states have begun revising their programs. In April 2025, Maharashtra reduced the benefit under the CM Ladki Bahin Yojana from ₹1,500 to ₹500 per month for beneficiaries already receiving another state-funded cash transfer.
Conversely, Jharkhand increased payouts under the CM Maiyan Samman Yojana from ₹1,000 to ₹2,500 per month in October 2024, reflecting political and social pressures to sustain such welfare spending.
Policy Challenge Ahead
The PRS report underscores a critical policy dilemma — balancing fiscal sustainability with social welfare goals. While UCTs have become a popular political tool to empower women and expand welfare outreach, experts warn that unchecked expansion could limit states’ ability to invest in infrastructure, health, and education.
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