In India’s fierce electoral battles, unconditional cash transfers have emerged as a powerful weapon to woo women voters. But recent defeats for some incumbent governments suggest these well-intentioned schemes might carry a hidden political price.

Key facts

  • States expected to spend $18 billion on UCTs in 2025-26
  • Kalaignar scheme covered 1.13 crore women initially, expanded by 16.94 lakh
  • Multiple state schemes faced targeting errors despite increased benefits

The Allure and Pitfalls of Direct Cash

Since 2020, programs like Tamil Nadu’s Kalaignar Magalir Urimai Thittam, West Bengal’s Lakshmir Bhandar, and Karnataka’s Gruha Lakshmi Yojana have poured billions into women’s hands. The Finance Ministry’s Economic Survey confirms states will spend about $18 billion on these transfers this fiscal year alone.

Yet despite boosting amounts before the 2026 elections, some governments lost power. The reason might lie in who gets left out.

When Targeting Goes Wrong

Identifying legitimate beneficiaries becomes a nightmare in a country with vast informal sectors. Governments use proxies like land ownership or electricity consumption—imperfect measures that inevitably exclude some deserving families while including others who might not qualify.

The Kalaignar scheme illustrates this perfectly. Promised as universal for women-headed households, fiscal reality forced eligibility restrictions. When launched in September 2023, it covered 1.13 crore women. But complaints poured in from those feeling unjustly excluded, prompting an expansion to include another 16.94 lakh beneficiaries by December 2025.

“Political costs arise not only from actual errors but also from perceived ones.”

That quote captures the essence of the problem. Even women who didn’t meet official criteria felt entitled to benefits. Their frustration deepened when eligible recipients received advance payments and special relief funds.

A Broader Lesson for Welfare Policy

These experiences reveal a fundamental tension: economics demands targeted aid to reach the neediest, but politics rewards broader inclusion. Voters judge governments not just by what they receive, but by what they believe others unfairly got.

Conditional transfers—like linking benefits to school enrollment—might offer a smarter path. Tamil Nadu’s Midday Meal Scheme shows how self-selection reduces grievances while achieving developmental goals.

As India designs future welfare policies, recognizing this political cost becomes as crucial as acknowledging economic benefits.