Conditional Cash Transfers in Nepal: Fight Against Caste Discrimination

On May 2, 2014:

In recent years, Nepal has witnessed conditional cash transfers (CCTs) - poverty alleviation programs offering funds to recipients in exchange for certain actions - as an increasingly popular instrument of social policy to bring about desirable behavioral changes among different population sub-groups. One of the recent policy interventions aimed at fostering much needed inter-caste cooperation and social integration entails a cash grant scheme exclusively for Dalits and widows. However, there remains an emergent need to evaluate the direct impact of such a major policy breakthrough and its potential spillover implications.

In 2009, the Nepalese government disclosed an ambitious plan of providing the poor inter-caste married couples with 100,000 Nepali rupees subject to fulfillment of eligibility condition that one of the spouses should be a Dalit. In addition, the plan offers a supplementary cash incentive of 50,000 Nepali rupees for both the widow and the new husband upon her remarriage. Moreover, the law stipulates that the eligible couples receive cash grants within 30 days of marriage registration at district administration. Still, the government's intention to promote inter-caste marriage and undermine the notion of deep-rooted social stigma associated with widowhood is undeniably commendable.

Yet, recent media coverage stated that majority of the eligible couples haven't received their shares from the government till date. The inordinate delay in sanction of the allocated cash incentive to eligible inter-caste married couples underscores the government's failure to execute a policy in effect. At the other end, outright displeasure at the governmental inefficacy appears to disappoint the eligible candidates belonging to marginalized social groups. What's more pressing, however, is a deeper analysis on potential caveats regarding the implementation of social polices based on financial grants. It is, therefore, imperative that one reevaluates the policy and subsequently avoids pitfalls of hasty policy-making, including unseen perverse incentives among the stakeholders.

First of all, grounds for a generous ethnic-specific and gender-specific program intervention are well-established, given a growing consensus among scholars and policy makers that resource allocation to specific population sub-groups leads to a myriad of benefits. These benefits range from women's empowerment and affirmative action to improving child's overall human development.

In addition , statistical estimates bolster the claim for policy design geared towards enhancing socio-economic well-being of Dalits and widows. Government figures suggest that Dalits comprise 13% of the entire population of Nepal, and half as much as Brahmins and Chhetris combined (27%). On the contrary, widows lack double digits in terms of social representation, with Demographic Health Surveys reporting no significant change in the population (roughly 2%) over the last thirteen years. Still, their deplorable status and existing barriers to empowerment can't be overlooked in the aftermath of the Maoist insurgency.

Despite the burgeoning literature on the need to launch CCTs, relatively little is known about whether such cash incentive schemes have a positive impact on measures of social integration in the long run. Sadly, the Nepalese government appears to have expended a cursory effort in monitoring the changes among low caste groups and the widowed. Given that disbursement of funds remains a major obstacle, developing a detailed publicly available database of the cash recipients is, at present, an uphill task. This lack of sufficient information prevents the government from evaluating the linkage between access to cash grants and behavioral change among the recipients in their communities.

Interestingly, CCTs aimed at promoting inter-caste marriage and dissuading social discrimination against the widowed isn't completely unique to Nepal. Most states of India, including Bengal, Tamil Nadu and Maharashtra have adopted a similar policy strategy with cash incentives of 50,000 Indian rupees to encourage marriage between individuals belonging to scheduled tribes and general caste groups respectively. What's worse, the same problem of not distributing cash grants on time appears to exist in the helm of Indian affairs as well. The Bengal's government with inadequate funds unable to meet the financial needs of the eligible candidates in 2012 is a case in point.

The Indian case, however, leaves room for ample lessons Nepalese policy makers can learn from, adding a fresh impetus for effective policy-making in future. The eligibility condition among Indian couples is moderately stringent, although not sufficient. That the couple has to stay together for at least a year determines the transfer of the financial grant to their bank accounts. Unfortunately, the policy in Nepal is completely devoid of such criterion for strong monitoring. This means that potential impact of conditional cash transfers on marital dissolution among the eligible candidates can't be denied. Although no such concrete evidence exists in the Nepalese context, staggering increase in marital turnover (0.32 percentage points in two years) found from an experimental evaluation of the PROGRESA program in Mexico sheds some light on potential spillover effects of CCTs.

In theory, policy makers need to think hard on unintended adverse consequences associated with cash grants-based program interventions. On one hand, greater economic independence stemming from the cash incentives could lead to marital dissolution, or potential conflict among partners over the use of funds. Additionally, single men from low caste groups may become increasingly more attractive in the marriage market due to their increase in unearned income, causing higher rates of marital break-up and the subsequent formation of new unions.

On the other hand, growth in household income could contribute to sheer reduction of stress and violent conflict in relation to resource allocation within the household. This may lead to a significant long-term positive impact on a number of measures, specifically successful inter-caste marital relationships and the gradual social acceptance.

In conclusion, the policy decision to provide cash grants will go in vain unless the government thoroughly examines the status of the beneficiaries before and after they receive financial support. At present, the government appears to exhibit half-baked commitment towards the issue of social integration with no substantial evidence on its potential impact. The policy repercussions may be positive or negative; however, what's more important is to take concrete steps towards evaluating the change in welfare arising from such social policy experiments.