Conditional Cash Transfers (CCTs) to poor people are becoming popular around the world as an effective way of addressing poverty. Countries like Mexico, Brazil, Indonesia give cash to their poor families if they fulfil certain conditions such as sending their children to school and taking them to clinics for regular health checkups.
In countries like India, the opinion favouring implementation of the CCT programme is gaining wider support. There is ample evidence to show that such programmes have produced many positive results in countries where these are implemented.
The CCT programmes work by creating incentives for families to invest in their children's future. These also encourage governments to invest in strategies that allow the very poor to move out of long-term poverty — a situation in which poverty is passed from generation to generation.
Should Pakistan also try CCTs rather than unconditional cash transfers to help its poor break the poverty trap? Opinion is divided.
Ali Cheema, a political economist, insisted at a workshop on Punjab's efforts to address poverty last week that income support programmes or unconditional cash transfers to the poor and the vulnerable will not be able to dent poverty significantly.
'Anti-poverty policies must focus on breaking poverty trap and reducing vulnerability,' he says. This objective, he argues, cannot be achieved through unconditional cash transfers.
Ali is of the opinion that the anti-poverty initiatives should take into account the differences in the nature of poverty.
'The poor and poverty are not homogeneous; one size won't fit all. We need different kinds of programmes for different groups and geographical regions,' he contends.
'Headcount is not important; it is more important to break the poverty cycle by linking cash handouts to some sort of conditions — such as sending children to schools, learning some skill and involving the recipients in production, etc. That is how you can help the poor break out of the poverty trap,' he says.
Therefore, he contends, cash transfers or income support programmes should be conditional on some action by the recipient families.
The CCT programmes are not new to Pakistan. Punjab, for example, has been implementing one such programme in southern parts of the province under the World Bank-funded Punjab Education Sector Reforms Programme (PESRP).
Under the programme, the government provides a monthly stipend of Rs300 per girl child to families who agree to send them to school. In addition, the families are also provided edible oil to encourage parents to send their out-of-school children to schools.
But the success of these programmes is open to question. The government claims big success of the programme. Critics say it is because most recipients of the stipend had shifted their children from private institutions to public schools.
A World Bank report, Conditional Cash Transfers Reducing Present and Future Poverty, evaluates the CCT programmes as an example of how to use resources effectively.
But critics argue that CCT programmes are costly to administer and the money that could go to the poor is lost, part of the money intended for the targeted group goes to others not in need.
Also, the CCT programmes are punitive in nature if a deserving family does not agree with the conditions, it is deprived of the much-needed cash. CCT is also considered as bribe given to a family to force it to do something. They insist that basic income transfer is a much better alternative to remove poverty trap and increase equity and justice.
Kaiser Bengali, a Karachi-based political economist who has helped the government launch its Rs34 billion Benazir Income Support Programme (BISP), says unconditional cash transfers in the world are not uncommon. Many countries are implementing these programmes.
'Unemployment insurance in the United States, for example, is one form of unconditional cash transfers. Whether you want to have conditional cash transfers or unconditional depends upon the objective you wish to achieve,' he argues.
He says the primary objective of initiating unconditional cash transfers under the BISP is to help enhance the purchasing power of the low income groups.
'We have been experiencing double digit inflation since 2005, which is responsible for halving the purchasing power of the low income groups. It was a kind of emergency situation in which the government needed to act to help these vulnerable groups to enhance their income,' he says.
Bengali points out that countries implementing CCT programmes did not face emergency situations. The objectives that these countries wish to achieve — increasing school enrolment or providing children better access to health care — are also different, he says.
Shahid Kardar, another leading economic expert, also favours unconditional cash transfers to the poor.
'If you make cash transfers conditional in the given situation, it could cause problems for most. Even the condition of CNICs to qualify for help under the BISP could deprive many, particularly in parts of Balochistan and the NWFP, of the cash they so desperately need,' he argues.
He thinks that the government wouldn't be able to reach out to all the nine million families living below the poverty line. At the most 3.5 million families will benefit from BISP, he says.
Shahid agrees that there are places in Punjab and Sindh where cash transfers to the poor families can be made conditional. 'But you can't implement CCTs everywhere, especially in Balochistan and the NWFP, because of supply side constraints.
How can government ask parents to send their children to school if there is none in the area?,' he asks.
He, however, says cash handouts should be meant for the disabled, orphans, elderly, widows, or those who cannot work. 'Utmost care should be taken to identify the deserving people. Those who can work should be helped get employment rather than given cash.'
Even before the BISP was put together, number of poor were receiving cash handouts under the Zakat and Baitul Ma'al schemes, which are marred by massive misuse of funds.
Ali Cheema says a huge amount of money is involved in the cash transfer programmes.
At least Rs124 billion will be available for cash transfers next financial year Rs100 billion under the BISP and the remaining under the Punjab food stamp programme. This amount of money is in addition to the funds available under the Zakat and Baitul Ma'al schemes.
'The amount involved demands that the government focuses on institutionalising the mechanism of distribution to plug possible leakages,' says Ali.
Whatever the mode of cash transfers — conditional or unconditional, the government needs to maintain transparency and keep these programmes free from political interventions.
Shahid Kardar is of the view that the government should develop reliable data base of the poor and the vulnerable as well as those who are already obtaining financial support from Zakat Fund or Baitul Ma'al. 'This kind of data is important to avert the possibility of people drawing benefit from all federal and provincial income support schemes,' he says.
Shahid also warns against misuse of cash transfers for political or other reasons.
'It is important that a reliable list of people deserving cash transfers is developed. It is equally important that the list is updated periodically (to preclude the possibility of misuse of funds for supporting the poor),' he adds.
