In a dramatic transformation of India's social welfare landscape, unconditional cash transfers (UCTs) to women have evolved from a niche political promise to a massive, nationwide financial commitment. From just one state in 2020, these schemes have proliferated to 15 states in 2025, with the collective annual outlay skyrocketing from Rs 1,600 crore to a staggering Rs 2.46 lakh crore. This figure now rivals the country's most significant social-sector budgets, marking a fundamental shift in how welfare is delivered.
The New Arithmetic of Welfare: Cash, Votes, and Fiscal Strain
This financial revolution is set to directly benefit roughly 13 crore women in the financial year 2025-26, representing about one-fifth of India's female population. The promise of "cash in her account" has become a standard electoral pledge, creating a substantial and binding budget constraint for state governments. While designed with electoral gains in mind, the policy's effects ripple into household economics, enhancing women's bargaining power and influencing spending patterns.
However, this welfare expansion comes at a significant cost. These transfers are funded directly from state budgets, and in several states, spending on women's UCTs now consumes 2-3% of their Gross State Domestic Product (GSDP). With many states already running revenue deficits, analyses indicate their fiscal health would appear markedly stronger if these schemes were excluded. The trade-off is stark: every additional rupee committed here is a rupee less for critical areas like health facilities, nutrition programs, and school infrastructure, unless deficits are allowed to widen further.
Tailored Schemes and a Political Arms Race
The design of these programs varies dramatically across states, reflecting local political and economic realities. Monthly payouts range from Rs 2,500 in states like Telangana, Jharkhand, and Delhi to annual or one-time disbursements in Bihar and Andhra Pradesh. Eligibility criteria also swing widely, with some schemes targeting married women below certain income thresholds, others including widows and single women, and a few moving toward near-universal coverage for all adult women.
This has sparked a veritable political arms race. Regardless of the ruling party, a women-focused cash transfer is increasingly treated as a non-negotiable baseline of governance. The need to cater specifically to women voters, beyond traditional promises of electricity, roads, water, and housing, has cemented this approach.
Budget Dominance and Household Impact
The fiscal dominance of these schemes is profound. In Maharashtra, the allocation for the Ladki Bahin scheme is over 1.5 times the total spend on all other welfare programs. A similar pattern is observed in Andhra Pradesh. For most states, each extra rupee directed to UCTs imposes a heavy opportunity cost, limiting their ability to expand health infrastructure or deepen nutrition programs without exacerbating fiscal deficits.
Despite this, governments are signaling that predictable, liquid cash in women's hands is worth the cost. Some states have trimmed or frozen hikes in other welfare items while sharply increasing UCT allocations, effectively reprioritizing their budgets toward one highly visible, measurable, and electorally profitable flagship promise.
Experts argue the fiscal burden must be weighed against addressing deep-seated gender inequality. Sunaina Kumar of the Observer Research Foundation notes, "The amounts are very modest and, even then, they do make an impact on women's rights. A large section of women is out of work and faces absolute economic marginalisation. These programmes are responding to that need."
The financial impact on households is substantial. With the average monthly per capita consumption expenditure (MPCE) at Rs 4,122 in rural and Rs 6,996 in urban India (as per the latest Household Consumption Expenditure Survey), a monthly transfer of Rs 1,000 to Rs 2,500 per woman represents a significant portion of a low-income household's budget.
Where Does the Money Go? Consistent Spending Patterns Emerge
Research from multiple states reveals a strikingly consistent pattern in how this money is used. It primarily functions as "household glue," funding essential needs rather than discretionary splurges.
- Food is the top expenditure (e.g., 53% in Maharashtra, 78% in Karnataka, 43% in Tamil Nadu).
- Healthcare/medicines and children's education/fees are the next major categories.
- Spending on utilities and LPG refills regularly claims a share of the transfer.
- A meaningful minority of women save a portion, while some allocate funds for small productive spends like livestock, farm inputs, or microenterprise goods.
- A smaller share typically goes toward debt repayment.
This spending map, drawn from sources like Project Deep and state government reports, confirms that the money is largely channeled into stabilizing household finances and covering fundamental needs, underscoring the scheme's role as a critical economic safety net for millions of women and their families.
