While reading though some research for my Lit Review, I came across this article: Ghatak, M., Kumar, C., & Mitra, S. (2013). Cash versus kind: Understanding the preferences of the bicycle-programme beneficiaries in Bihar. London, UK: International Growth Centre.
I have previously posted about this program, as it looks like a great initiative, so I was interested to read more about it, but was shocked by a few of the program details and findings that (of course) were not included in this programs’ previous promotions.
Review of the report.
This article is looking at cash transfer schemes and specifically using one case study, the Bihar Mukhyamantri Cycle Yogina (Chief Minister’s Bicycle Programme) a Cash for Kind (Bicycle) program to discuss some of the preferences of the bicycle beneficiancies of this program. It is not analyzing the program as such, although some interesting program results are given which I will expand on, but this paper is looking at to the recipients prefer to get the cash or the bicycle – and why.
Cash for Kind program are where the government disperses cash to recipients, who then use the cash to access a certain ‘kind’ of goods (or service) – usually something that is predetermined and linked as a condition for receiving the cash – in this case the money was to purchase a bicycle for all 9th grade students enrolled in school.
This report is 22 pages, so I am not going to give you all the results and details, but here is a few of the more interesting aspects of the report.
The Bihar bike program is a well-known Indian program which provided ALL the 14 year-old girls (9th grade) in the whole state with bicycles. Bihar is one of India’s Eastern States that boarders Nepal and is considered to be one of the most impoverished states in India. The Mukhyamantri Cycle Yogina originally started in 2006 and provided Rs 2,400 for purchasing bicycles but was only for the girls. In 2009-2010 the program was expanded to include all the boys in the state of the same age and for the academic year of 2011-2012 the cash was increased to Rs 2500 per student. In 2012 – 2013, a conditional change was made that only students who maintained a 75% attendance at school were eligible.
So this report is a follow up of this program and was undertaken Sept – Oct 2012 over 36 villages and involved surveying 840 households (as a representative sample of the whole district) of which 958 bike recipients lived (some households had more than one child in the program).
Some of the key results
- Do the benefits reach the intended beneficiaries – overall, yes.
- Overall 90% of the beneficiaries reported being happy with this program (no grievances)
- Issues of corruption – corruption can occur by various actors at various stages, but for this program it was difficult to do and corruption was considered to be very low.
- Ghost beneficiaries
- Enrolled in multiple schools – double benefits
- Was the accurate amount of $$ received?
- Receiving other benefits/services (not a bike)
- Program administrators skimming a commission by using their own voucher or coupon system
- Even though there were areas where corruption could occur, not much did with 93.3% reporting having received the correct amount – meaning 56 households received less than they were entitled to.
- Results show that 98% of those who received the cash/voucher used it as required to purchase a new bicycle – over the course of a whole state – that is a pretty amazing result.
- 45% said they would prefer cash instead of a bicycle
Rest of the report – some scary details
The rest of the report discusses the determinates of why certain households choose a preference between cash and kind (bicycle) – for example the quality of the bike was mentioned as one of the determinants for choosing cash or bike.
In the discussion, the report indicates a few interesting and very disturbing features of this program.
- For example, one of the supply side conditions, and the way the program was set up, was that the beneficiaries were provided with cash (provided by the state, but distributed by the teachers at school), then they went out and purchased a bicycle with that cash and brought back the receipt as evidence of a bike purchase. Interestingly, this was not how the full program was implemented. Some districts deviated from this system and 30% of the beneficiaries were required to submit a receipt BEFORE they received the cash for the bike.
This meant 3 things: 1. People had to either purchase the bike with their own money, or 2. Get a fake receipt and 3. This would put extra financial strain on the poorest of the poor, of which this program was trying to help, but forcing into a compromised situation.
- There were huge delays of payment to the recipients of up to 6-months.
- Most troubling is, that the program provided an inadequate amount of money to purchase a bike in the first place – 98% of beneficiaries had to add money a significant amount of money to the program cash to buy a bike – on average Rs 979.
- The market price for the three CHEAPEST bike brands in the area Atals, Avon and Hero (of which about 80% of the beneficiaries selected) range in price of Rs 3100 – 3300, but the government supplied only Rs 2500 – meaning that pretty much all of the recipients had to make up the difference themselves. For the richer households this comes out of savings, for the poorer families – this puts them further into debt, with 25% of all the recipients having to BORROW money to buy a bike – thus indebting them into poverty even further.
And this report states that 90% of the recipients were happy with the program!!??
Don’t get me wrong, the program is ambitious on many levels and you cannot get everything right – and the premise of supplying a new bike to increase school access is something I am very supportive of. However, ethically I have a major problem with programs whose conditionality has a direct and immediate negative consequence for the recipients when program organisers tout the program a success.
Such an error is easily rectifiable with A) doing the right homework to find out how much money is actually needed to buy a bike before implementation and B) increasing the government’s allocation to all beneficiaries if the program is already in effect.
Loan sharks anyone?
The report acknowledges that there is a ‘trade-off between universality and corruption’ meaning that beneficiary needs need to be balanced with the level of leakage and corruption. But given the opening stats on the low corruption level for this program (98% of recipients got the right amount of cash = no corruption), it is hardly justifiable to decrease the reimbursement amount so much that being involved in the program diminishes the possible benefits to such a point where the needs of the beneficiaries are negatively compounded now three fold from having borrowed money to be in the program. Loan sharks anyone?
As a community development practitioner, I find these kind of programs disturbing, as many of them look good in the NGO reports and social media, but by digging a little deeper there are some interesting lessons to be learnt for future review, modifications and application.
I appreciate that this program is on a massive scale and is one of the first of its kind in the world, but critical features such as supplying the correct amount are basic provisions that should have been addressed before implementation.
I would be very interested to hear the rational given for this cash transfer amount for this program.