12 states to spend Rs 1.68 lakh crore on women's cash transfers

Schemes such as Madhya Pradesh's Ladli Behna Yojana, Jharkhand's Maiya Samman Yojana and Tamil Nadu's Magalir Urimai Thogai transfer Rs 1,000 to Rs 2,500 a month to women. A PRS Legislative Research report estimates 12 states will spend Rs 1.68 lakh crore on unconditional cash transfers in 2025-26, against the Centre's Rs 86,000 crore for MGNREGA. An EAC-PM study found higher consumption and savings in Maharashtra and Odisha, while the RBI warned high debt threatens state finances.

Written by AI from PRS Legislative Research · not yet reviewed by an editor · Published 1 Oct 2026, 4:45 am IST

Source

PRS Legislative Research · read the original report ↗

#cash transfers#state finances#women welfare#rbi#public spending

Desk check · compared with the source

What the desk checked (4)

12 states were estimated to spend Rs 1.68 lakh crore on unconditional cash transfers in 2025-26. — Attributed in source to a PRS Legislative Research report; figure appears in source.
The Union government allocated Rs 86,000 crore for MGNREGA in 2025-26. — Figure appears in source without a named document, used as a comparison point.
An EAC-PM working paper study found improved consumption and savings among beneficiaries in Maharashtra and Odisha. — Attributed to the named study 'Unconditional Women Cash Transfer Programmes in India'; findings summarised, not quantified.
States' consolidated debt fell from 31% in March 2021 to 29.2% in 2026 (budget estimates), with Punjab at 46.4% of GSDP, West Bengal 38.9% and Bihar 36.8%. — Figures appear in source; debt-sustainability warning is quoted from the RBI, the Axis Bank report is cited for funding methods.

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Analysts’ view opinion

AI Political Analyst

Unconditional cash transfers to women are no longer just welfare — they have become one of the most potent electoral instruments in Indian politics. The fact that 12 states are set to spend Rs 1.68 lakh crore in 2025-26, nearly double the Rs 86,000 crore the Union government allocated to MGNREGA that year, signals a shift in political priorities from guaranteed work to direct cash. And because states across the political spectrum — Madhya Pradesh, Jharkhand, Tamil Nadu — have adopted the model, this is not one party's agenda but a new consensus.

The core political logic is the recognition of women as a distinct voting bloc; a transfer that lands directly with the beneficiary cuts across caste and regional arithmetic, making the political return unusually visible.
BJP-ruled Madhya Pradesh and Jharkhand alongside DMK-ruled Tamil Nadu following the same template suggests no party can now afford to campaign against such schemes.
The EAC-PM study's finding of improved consumption and savings gives supporters a policy defence, weakening the simple 'freebies' critique.
On the other side, the RBI's warning that such spending risks 'crowding out' investment, alongside debt burdens of 46.4 per cent of GSDP in Punjab, 38.9 per cent in West Bengal and 36.8 per cent in Bihar, sets up a fiscal-discipline-versus-welfare political fight.
Once launched, these schemes are politically near-impossible to withdraw, so future governments are likelier to compete on raising amounts than to retain any freedom to trim them.

What to watch — Watch for a bidding war on transfer amounts in the next round of assembly elections, and for where high-debt states quietly cut other spending to fund them.

The story does not establish how much any single scheme actually swung an election result, nor does it detail which budget heads states are squeezing or offer firm estimates of the long-term fiscal cost.

Deep dive

Research brief · 8 facts · 4 dates · exam-ready

The brief

Context

Several Indian states have rolled out unconditional cash transfer schemes for women, paying roughly Rs 1,000 to Rs 2,500 a month directly into beneficiaries' accounts. Examples include Madhya Pradesh's Ladli Behna Yojana, Jharkhand's Maiya Samman Yojana and Tamil Nadu's Magalir Urimai Thogai. These schemes are being read both as welfare and women's empowerment tools and as an electoral strategy by political parties. A new EAC-PM working paper finds welfare gains from such schemes, even as the RBI and analysts warn about their effect on already stressed state finances.

Key facts

Cash transfers to women under state schemes typically range from Rs 1,000 to Rs 2,500 per month.
PRS Legislative Research estimates 12 states would spend Rs 1.68 lakh crore on unconditional cash transfers in 2025-26.
The Union government allocated Rs 86,000 crore for MGNREGA in 2025-26 — about half the 12 states' cash transfer outlay.
The EAC-PM working paper 'Unconditional Women Cash Transfer Programmes in India' studied schemes in Maharashtra and Odisha.
The study found improved consumption and savings among beneficiaries, with more spending on medical, educational and lifestyle purposes.
Consolidated debt of states fell from 31 per cent in March 2021 to 29.2 per cent in 2026 (budget estimates).
Punjab's debt burden is 46.4 per cent of GSDP, West Bengal's 38.9 per cent and Bihar's 36.8 per cent.
An Axis Bank report says resources for these schemes are raised through expenditure switching and higher deficits.

Timeline

March 2021Consolidated debt of states stood at 31 per cent.
2025-2612 states estimated to spend Rs 1.68 lakh crore on unconditional cash transfers; Centre allocates Rs 86,000 crore for MGNREGA.
2026 (budget estimates)Consolidated state debt at 29.2 per cent, with wide variation across states.
Jul 8, 2026Story published discussing the EAC-PM working paper, PRS estimates and RBI's warnings.

Who has a stake

Women beneficiaries — Receive Rs 1,000-2,500 monthly; study shows higher consumption, savings and spending on medical, educational and lifestyle needs.
State governments (12 states) — Committed Rs 1.68 lakh crore in 2025-26; must fund it via expenditure switching or higher deficits.
Reserve Bank of India — Flags that such schemes and populist measures "run the risk of crowding out" investments and pose risks to state finances.
EAC-PM (Economic Advisory Council to the Prime Minister) — Authored the working paper providing evidence of welfare gains in Maharashtra and Odisha.
PRS Legislative Research — Produced the estimate of state spending on unconditional cash transfers used as the benchmark figure.
High-debt states such as Punjab, West Bengal and Bihar — Debt at 46.4, 38.9 and 36.8 per cent of GSDP respectively, limiting fiscal space for new commitments.
Political parties — Use unconditional cash transfers as an electoral strategy alongside welfare objectives.

Why it matters

State-level cash transfers to women now exceed, in aggregate, the Centre's flagship rural employment programme, marking a structural shift in how welfare is delivered in India. Evidence of higher consumption, savings and spending on health and education suggests real household gains, but the money is being raised through expenditure switching and higher deficits. With state debt varying sharply — Punjab at 46.4 per cent of GSDP — the trade-off between income support and capital investment becomes a central fiscal question.

UPSC angle

Prelims pointers

PRS Legislative Research estimate: 12 states to spend Rs 1.68 lakh crore on unconditional cash transfers in 2025-26.
MGNREGA allocation by the Union government for 2025-26: Rs 86,000 crore.
Women's cash transfer schemes: Ladli Behna Yojana (Madhya Pradesh), Maiya Samman Yojana (Jharkhand), Magalir Urimai Thogai (Tamil Nadu).
EAC-PM working paper 'Unconditional Women Cash Transfer Programmes in India' examined Maharashtra and Odisha.
Consolidated state debt: 31 per cent (March 2021) to 29.2 per cent (2026 BE); Punjab 46.4 per cent of GSDP, West Bengal 38.9, Bihar 36.8.
RBI warning: high debt, contingent liabilities from guarantees and cash transfer schemes pose risks to state finances.

Mains framing

Unconditional cash transfers to women have moved from the margins of state welfare to its centre: 12 states are estimated to spend Rs 1.68 lakh crore in 2025-26, nearly double the Centre's Rs 86,000 crore MGNREGA allocation. The appeal is twofold — evidence from the EAC-PM working paper on Maharashtra and Odisha shows higher consumption and savings, with beneficiaries channelling more into medical, educational and lifestyle spending, thereby raising household welfare and women's agency; and politically, such transfers have proven electorally rewarding. The costs, however, are fiscal. An Axis Bank report notes the resources come from expenditure switching and higher deficits, while the RBI warns that such schemes, along with free electricity, "run the risk of crowding out" investment, and that high debt and growing contingent liabilities from guarantees pose risks to state finances. Though consolidated state debt has eased from 31 per cent in March 2021 to 29.2 per cent in 2026 BE, the aggregate conceals sharp divergence — Punjab at 46.4 per cent of GSDP, West Bengal 38.9 and Bihar 36.8. The way forward lies in weighing recurring income-support commitments against capital spending needs, greater transparency on contingent liabilities, and rigorous evaluation of outcomes so that welfare gains are sustained without eroding state balance sheets.

Key terms

Unconditional cash transfer: Direct money transfer to beneficiaries without conditions on behaviour or use — here, Rs 1,000-2,500 a month to women.
Ladli Behna Yojana: Madhya Pradesh's cash transfer scheme for women, cited as an early example of the trend.
Magalir Urimai Thogai: Tamil Nadu's monthly cash entitlement scheme for women.
EAC-PM: Economic Advisory Council to the Prime Minister; published the working paper on women's unconditional cash transfer programmes.
PRS Legislative Research: Research organisation that estimated the Rs 1.68 lakh crore cash transfer spending by 12 states in 2025-26.
Crowding out: RBI's concern that large welfare and populist spending displaces government investment spending.

Practice questions

State-level unconditional cash transfers to women now exceed the Centre's MGNREGA allocation. Examine the welfare gains and fiscal risks of this shift in India's social security architecture.
"High debt levels and growing contingent liabilities pose risks to state finances." Discuss in the context of women's cash transfer schemes and the RBI's crowding-out concern.
Do unconditional cash transfers promote women's empowerment, or are they primarily an electoral instrument? Argue with evidence from the EAC-PM study on Maharashtra and Odisha.

Grounded only in the source report — figures and dates are the source's, not inferred.

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