There are supporting arguments for direct cash transfer
to the poor as promised by the Congress party resulting in their higher
productivity based on Behavioral
economics theories and the success of this scheme in various nations.
Behavioral economics
seeks to complement traditional approaches
to economics by incorporating
insights from psychology and human behavior, and taking a behavioral approach allows us to
understand a host of behaviors that are critical to the success of a variety of
development policies. It is true that , when the poorest of the nation
get direct cash transfer, they would like to satisfy their hunger primarily and
their spending behavior would center around food expenditure . Then, other
basic needs would be satisfied .This type of behavior regarding use of cash
transfer would reflect on their productivity through health improvement . Through
linkage effect on the economy, job opportunities would be created and reduce the
magnitude of poverty in a nation. When the Congress Party’s NYAY scheme meant
for the 20% of the poor is criticized by
the major opposition parties on the basis of their doubts on it’s likely positive impact of this scheme
and source of funding , the success story of this scheme in other nation will
encourage them to be firm on this promise.
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