Cash Transfers in Nepal: Do They Contribute to Social Inclusion?

Abstract

It is often assumed that social protection leads to social inclusion and other well-being indicators. Yet evidence of this impact is weak. Cash transfers are a social protection tool designed to reduce poverty which can also have an impact on human development indicators such as health and education. In the district of Sarlahi, Nepal, cash transfer amounts are too low to improve health and education opportunities or productive pursuits and thus to break the inter-generational cycle of poverty. However, the transfer allows beneficiaries to participate more in community activities, increases their access to information and social networks, and enhances the social contract and people's relationship with the state. This breaks down some of the invisible barriers that perpetuate exclusion. Paying cash transfers in Nepal kick-starts other processes of inclusion and well-being that are hard to overcome by other means because they are invisible, denied and relational. The findings reveal that universal transfers generate perceptions of equality for beneficiaries who value receiving the same thing from the state as the rich. Yet being treated the same as the well-off will not necessarily lead to equal opportunities, poverty reduction or improved local governance. Cash transfers can facilitate social inclusion but are not enough alone to achieve substantive inclusion.