When India's poorest states make promises they can't afford

To empower Indian women from economically weaker sections, Indian states are rolling out unconditional cash transfer schemes. The scheme aims to benefit transfer to women who qualify based on income thresholds, age, and other eligibility factors.

Three years ago, just two states had implemented this scheme according to a report by think tank PRS Legislative Research.

But the trend has been putting additional pressure on the state finances. The report notes that a total of 12 states across India will be implementing, and spending about Rs 1.68 lakh crore on UCT in 2025-26.  

From these 12 states, about six states lack revenue this year, which throws light on the fiscal pressure linked to the rapid expansion of women-centric pay-outs.  

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States such as Assam and West Bengal have sharply increased their allocations to women’s UCTs over the previous year by 31 per cent and 15 per cent, respectively.

However, this scheme is putting strain on some states and their budgets as they already have certain schemes and introduction of another causes mismanagement and related implications.  

The report highlights that out of the 12 states, six suffer from revenue deficits for 2025-26. Some states have already launched several schemes like CM Ladki Bahin Yojana, and CM Maiyan Samman Yojana.  

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The Reserve Bank of India (RBI) already warned that the rising subsidies towards women could reduce fiscal space for productive spending.

Karnataka, which had a projected revenue surplus of 0.3 per cent of its Gross State Domestic Product (GSDP), would also move into deficit once UCT spending is accounted for. Delhi was removed due to the unavailability of GSDP estimates.