Economic Survey 2025–26 estimates states will spend about ₹1.7 lakh crore on cash transfer schemes for women
Report warns unconditional transfers are widening fiscal and revenue deficits in several states
Survey questions long-term gains for employment, nutrition and education
Government paper urges shifting towards conditional and time-bound cash assistance
Unconditional cash transfers to women could place a heavy strain on state finances, with an estimated Rs 1.7 lakh crore likely to be spent on such schemes in the 2025-26 financial year, according to the Economic Survey 2025-26, tabled in Parliament on January 29, 2026.
While acknowledging that cash assistance can provide immediate income support to women, the survey argues that unconditional and long-running schemes carry fiscal and economic risks, and should instead be tied to conditions related to health, education and skills.
The survey noted that the number of states implementing unconditional cash transfer programmes is rising steadily. Between 2022-23 and 2025-26, the number of states running such schemes is projected to increase more than fivefold, with nearly half of them expected to face revenue deficits.
Citing a research paper, the survey stated spending on cash assistance programmes ranges from 0.19% to 1.25% of states’ gross state domestic product (GSDP). As a share of total budgetary expenditure, this translates to between 0.68 per cent and 8.26 per cent.
Based on a detailed study across seven states, it estimates that cash transfers account for 11 per cent to 24 per cent of the monthly income of women daily wage workers, and between 11 per cent and 87 per cent for self-employed women. In rural areas, at least half of households are estimated to meet 40 per cent to 50 per cent of their monthly consumption through such transfers.
“It is argued that cash transfers provide immediate income support, helping women meet unmet health and personal needs,” the survey stated. “Some view it as a return for their unpaid contribution to the gross domestic product (GDP).”
The survey raised concerns that the expansion of unconditional transfers has come at a time when states have limited fiscal space. It noted that the combined gross fiscal deficit of states rose from 2.6 per cent of GDP in 2021-22 to a projected 3.2 per cent in 2024-25. Over the same period, the combined revenue deficit increased from 0.4 per cent to 0.7 per cent.
This, it says, suggests states are borrowing to meet routine revenue expenditure. Outstanding liabilities of states reached about 28.1 per cent of GDP in 2024-25. In 2023-24, around 62 per cent of states’ total revenue receipts were spent on essential outlays such as salaries, pensions, interest payments and subsidies.
As a result, capital expenditure, which is critical for long-term development is being squeezed, the survey warned.
While cash assistance is often justified as a way to support women’s health and personal needs, and as recognition of unpaid care work, the survey questioned whether unconditional transfers deliver lasting benefits.
It points to evidence suggesting that such schemes can reduce female labour force participation and raise concerns about medium-term economic growth if they are not paired with investments in employment, skills and human capital.
The survey also cited a recent meta-analysis by the United States-based National Bureau of Economic Research, which examined 72 unconditional cash transfer programmes across 34 low- and middle-income countries. The study found that while cash transfers improved food security, consumption and short-term income stability, they did not consistently improve child nutrition, educational outcomes or enable durable exits from poverty.
“Unconditional cash transfers are not substitutes for investments in health, education, nutrition, childcare, or growth-enhancing public expenditure,” the survey said, citing the research.
Drawing on international examples, the Survey argues that cash transfers should be subject to conditions and time limits. In Mexico, families received cash only if children attended school regularly and pregnant women and young children were registered for health check-ups and nutrition monitoring. Payments could be stopped if conditions were not met.
Brazil linked cash assistance to minimum school attendance and basic health requirements such as vaccinations and maternal care, ensuring that government spending directly improved education, health, and nutrition outcomes. In the Philippines, transfers are time-bound, with families phased out as their circumstances improve.
In the United States, schemes such as Opportunity NYC were run as time-limited experiments, with payments linked to education, health and employment targets, before being discontinued.
According to the survey, these examples show that conditional and time-bound cash assistance can help build self-reliance, while unconditional and permanent transfers often fail to deliver sustained social and economic outcomes.