SBI Report Warns: Women-Centric DBT Schemes Could Strain State Finances

A recent report by the State Bank of India (SBI) has raised concerns about the fiscal sustainability of women-centric Direct Benefit Transfer (DBT) schemes introduced by various states.
These initiatives, aimed at directly transferring cash to women, have gained significant traction, especially in the lead-up to elections. However, the report warns that such programs could severely impact state finances.
Terming it a "tsunami of women-centric schemes," the report highlights that the cumulative cost of these initiatives across eight states has now exceeded ₹1.5 lakh crore, accounting for 3-11% of their revenue receipts.
While some states are better equipped to handle these expenses, others may face fiscal challenges. For instance, Karnataka’s Gruha Lakshmi Scheme, which allocates ₹2,000 per month to the female head of a family, has a budget of ₹28,608 crore, consuming 11% of the state’s revenue receipts.
Similarly, West Bengal’s Lakshmir Bhandar Scheme, providing a one-time grant of ₹1,000 to women from economically weaker sections, costs ₹14,400 crore, or 6% of its revenue receipts. Meanwhile, Delhi’s Mukhyamantri Mahila Samman Yojana, which offers ₹1,000 per month to adult women, amounts to ₹2,000 crore, or 3% of revenue receipts.
States like Odisha, which benefit from higher non-tax revenues and do not require additional borrowing, are in a better position to fund such schemes. However, for many other states, these programs could lead to financial strain.
The report cautions that such welfare measures, while empowering women and providing electoral benefits, must be implemented with careful consideration of the states' fiscal health and borrowing patterns. The report also suggests exploring a more sustainable approach, such as a universal income transfer scheme with matching grants from the Union government to states.
This, it argues, could reduce the fiscal burden on states while curbing market-disrupting subsidies. With the growing trend of income transfer promises for women, the report notes that even the central government may face pressure to adopt similar policies.
It calls for a holistic evaluation of welfare spending and its long-term impact on state finances to ensure sustainable development. In conclusion, while these schemes can empower women and offer social benefits, SBI’s report emphasizes the importance of balancing welfare initiatives with fiscal responsibility to avoid long-term financial challenges.