Direct transfer policies for the poor

Abstract

We discuss various anti-poverty policies which involve direct transfer policies for the poor, focusing on their different dimensions—namely the size and time sequence of the transfers, whether it is cash or in kind, any conditionality involved, whether they are means-tested. We argue that their pros and cons depend on what is the underlying aspect of poverty that the policy is aiming to address, namely what is the cause of it, what is the time horizon, what is the social objective, and what, if any, limitations on state capacity might be present. We illustrate the issues involved by discussing two transfer policies in detail, a rural asset transfer programme in Bangladesh and a hypothetical universal income support programme in India—and highlight the dual nature of such policies as both redistributive and potentially productive investments. We conclude by discussing the potential complementarities between different types of anti-poverty policies.