New Delhi: In-kind social transfers through government welfare schemes improved the standard of living of an estimated 22 crore people in India, with a larger share of the rural population benefiting than the urban population, according to a research paper published in a National Statistical Office (NSO) journal on Tuesday.
At 40.5 percent, West Bengal recorded the highest share of people experiencing an improvement in living standards among 18 major states analysed, according to a paper published in NSO’s technical journal—Sarvekshana
In-kind social transfers refer to goods or services provided free or at subsidised rates rather than through direct cash payments. These include foodgrains distributed through the Public Distribution System (PDS), as well as items such as school uniforms and footwear.
The study, ‘Impact of in-kind social transfer on level of living of Indian households’, found that 18.8 percent of the rural population and 8.4 percent of the urban population experienced an improvement in living standards after accounting for the value of selected free or subsidised goods.
“At all-India level, about 18.8 percent of rural population and 8.4 percent of urban population, attributing to approximately 22 crores people, have experienced an improvement in their level of living after receiving in-kind transfers,” the authors said.
Authored by Amitava Saha, Deputy Director General at NSO, Kolkata; and Gopal Saha, Deputy Director at NSO, Guwahati, the paper uses data from the Household Consumption Expenditure Survey (HCES) 2022-23 to assess the impact of benefits distributed through government welfare programmes.
The authors said these benefits increase the resources available to households, leaving them with more money to spend on other needs.
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West Bengal leads among major states
West Bengal recorded the highest share of its population experiencing an improvement in living standards, at 40.5 percent, followed by Chhattisgarh at 29.2 percent, Assam at 29 percent and Karnataka at 28.4 percent.
The share stood at 22.7 percent in Uttar Pradesh, 22.2 percent in Telangana, 18.8 percent in Andhra Pradesh and 18.7 percent in Tamil Nadu. Gujarat recorded the lowest share among the 18 states, at 3.7 percent, followed by Kerala at 4.6 percent.
The gains were generally larger in rural areas. In West Bengal, 46.5 percent of the rural population and 24.9 percent of the urban population experienced an improvement. The corresponding figures were 36.9 percent and 13.5 percent in Karnataka, and 33 percent and 13.6 percent in Chhattisgarh.
The paper found that improvements were generally more pronounced among households in the lowest consumption groups, particularly in rural India.
“Such lateral movement of the population resonates with the progressive nature of the social transfers, i.e., these are intended for the poor, not the rich,” the authors said. Here, lateral movement refers to households shifting into a higher consumption group after the estimated value of benefits was added to their expenditure.
Transfers also reduce consumption inequality
The researchers compared monthly per capita consumption expenditure (MPCE) before and after accounting for the estimated value of selected free or subsidised items. MPCE is the average monthly consumption expenditure per person in a household.
They then examined whether including these benefits changed households’ positions in the consumption distribution. The study found that consumption inequality declined slightly after the benefits were included.
The Gini coefficient, a measure of inequality in which zero represents complete equality and higher values indicate greater inequality, fell from 0.266 to 0.261 in rural areas and from 0.314 to 0.309 in urban areas when in-kind transfers are included in the MPCE.
The authors also used another measure, the Gini Welfare Function (GWF), to assess changes in consumption and inequality together. Its value increased from 1,474 to 1,518 in rural areas and from 2,408 to 2,448 in urban areas after the benefits were included.
“This increase in GWF suggests that social transfers not only reduce inequality but also augment effective consumption levels, particularly among the lower fractile classes in the consumption distribution,” the paper stated.
However, the study did not assign monetary values to free medical services or education received by households. The authors said including these benefits could have shown further improvements, particularly among households in the lower consumption groups.
The findings suggest that free or subsidised goods improve household consumption and free up resources for other needs. However, the study does not directly measure how many people have been lifted out of poverty.
(Edited by Ajeet Tiwari)
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