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Unformatted text preview: INSIGHT Economic & Political Weekly EPW june 26, 2010 vol xlv nos 26 & 27 89 Brazil’s ‘Fome Zero’ Strategy: Can India Implement Cash Transfers? Vinod Vyasulu Vinod Vyasulu ( [email protected] ) is with the Centre for Budget and Policy Studies, Bangalore. Brazil has the largest cash transfer scheme in the world and it has had a measure of success in fighting poverty. Its experience shows that cash transfers, when implemented properly, are at best a necessary condition for poverty alleviation. Supply side constraints have to be removed if the increased purchasing power is not to lead to unbridled inflation that will hurt the poor badly. While a case can be made for a cash transfer system in India, in the existing situation of an incomplete transition to a multi- level structure of government, with insufficient clarity on intergovernmental relations, and an overarching set of civil services fighting for turf at the union and state levels, it will be difficult for India to design suitable programmes. I n the last two decades, many Latin American countries have used cash transfers as a major element of poverty reduction strategies. 1 Of these, Brazil has the largest cash transfer programme to the poor in the world and this has now grown into a broader strategy for poverty and inequality reduction. The Brazilian experience is generally considered to be successful. See ILO (February 2009, March 2009) and Fiszbein et al (2009). The cash transfers began in the mid- 1980s in Campinas in Sao Paulo, and in the federal district of Brasilia. Cristovão Buarque, the former governor of Distrito Federal (Brasilia), is considered the father of the programme. These are big and powerful municipalities and the example caught on, spreading to around 70 munici- palities in the next few years. They were expanded greatly in scope and scale in the last decade to provide a measure of social security for the poor in a highly unequal society. Both poverty and inequality have been reduced in Brazil. What can India learn from this experience? This article hopes to begin a debate on this subject This article is organised as follows. Sec- tion 1 describes the cash transfer pro- grammes that Brazil has implemented. Section 2 explores some of the immediate and long-term impacts of these programmes. Section 3 looks at lessons for India. 1 What Are Cash Transfers? Since poverty is lack of income, the federal government of Brazil transfers cash to families in poverty to help them meet basic needs, if the family agrees to send children to school and to get them vaccinated. The amount transferred depends on the family income and the number of members in the household. For women and children, there are conditional cash transfers for specific actions. If the child is taken to a health centre for regular checkups and inocula- tions, a certain amount is transferred. If a woman goes to an institution for delivery, there is another such transfer. These are monitored by the Social Assistance Refer-...
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