Can cash transfers empower women?

Cash transfers might offer immediate support, but lasting economic empowerment depends on women’s access to jobs, assets and productive resources.

Unconditional Cash Transfer (UCT) has become one of the most potent instruments of social protection in developing countries.

India is no exception: several government schemes such as Annapurna Bhandar (previously Lakshmir Bhandar in West Bengal), Ladli Behna Yojana in Madhya Pradesh and Subhadra Yojana in Orissa are being run to help the cause of empowering women in the country.

Direct cash transfer plays an instrumental role in decreasing poverty and inequality. The system has its roots in Latin America, but many developing countries, including India, have modified their welfare system to include direct cash transfers.^[1]

In India, state governments are increasingly transferring money directly to women, with the expectation that it will reduce poverty, improve household welfare and strengthen their economic position.

These initiatives also raise important questions about whether access to financial resources translates into greater autonomy and decision-making power within households. Ultimately, the effectiveness of such transfers must be assessed not merely by the amount disbursed but by their ability to create lasting economic and social empowerment for women.

As of 2025, 15 states and one union territory were covered under unconditional cash transfers, up from a single state in 2020, and covering one-fifth of the total female population . The estimated spend stands at Rs 1.7 lakh crore, reaching 12 crore women in 2025-26 .^[2][3]

While most of these schemes were designed for electoral gains, they ended up producing results beyond their scope. They have strengthened women’s bargaining power within the household and given them a greater say in spending decisions. They have also improved financial inclusion and contributed to overall family welfare.

Research suggests that income earned by women contributes to greater improvements in household welfare than an equivalent amount of income earned by men.^[4]

But an important question remains: does giving women cash empower them, and are the outcomes observed sustainable and gender transformative?

The answer depends on what we mean by ‘empowerment’. If empowerment means better consumption, short term financial security and a stronger voice within the household, evidence suggests that cash transfers can help.

Amartya Sen’s capability approach can be integrated with Unconditional Cash Transfers (UCTs) by viewing cash not merely as income support, but as a means of expanding women’s real freedoms and capabilities.^[5]

According to a 2026 study , cash transfers for women significantly increased their savings and consumption, even as they encouraged spending on education, healthcare, lifestyle needs, and digital payments.^[3]

The schemes also generated positive household spillovers, strengthening family finances and supporting women’s financial empowerment . Another study showed that unconditional cash transfers to new mothers improved household nutrition, dietary diversity, and nutrient consumption while reducing gender disparities in food allocation.^[3][6]

The transfers also enhanced children’s functional development, although improvements in physical growth were limited and appeared stronger in areas with better sanitation.

However, if empowerment means durable economic independence through employment, assets and control over productive resources, cash alone is unlikely to be sufficient.

India’s female labour-force participation has increased substantially, but a large gender gap remains. The overall female Labour Force Participation Rate (LFPR) for 15 years and above stood at 34.6 percent in September 2026 . This is a fall from August, driven by a drop in rural female LFPR.^[7][8]

India reported 41.2 percent parity score in Economic Participation and Opportunity category in the Global Gender Gap Report 2026. This indicates that it has closed only 41.2 percent of the measured gender gap in this aspect. This is 3.5 percentage points lower than its best performance of 44.6 percent reported in 2013. India has reported a meagre 1.5 percentage point progress in the economic parity scores over the last 20 years. This is also reflected in the gender gap in male and female workforce participation – share of men participating in the workforce is 40.8 percentage points higher than that of women – as per latest estimates.^[9]

This creates a fundamental policy dilemma.

A woman may receive a monthly transfer while still remaining outside paid employment because of childcare responsibilities, social norms, inadequate employment opportunities, unsafe transport or the lack of suitable jobs.

In other words, income support can address the consequence of economic exclusion without necessarily removing its cause. Long-term empowerment requires building capabilities and creating opportunities for upward mobility.

Cash transfers could also be linked to outcome-based indicators, such as improvements in children’s nutritional outcomes like improved child growth, reduction in stunting and anaemia among others. The better objective would be to use cash transfers as a platform for capability expansion through better access to education, healthcare, nutrition, skills and economic opportunities.

Cash transfers can empower women by enhancing their control over resources and broadening their choices. This can happen when women have direct access to funds, greater say in household spending, better access to education and healthcare, and opportunities to invest in their own skills and livelihoods. But it can also reinforce dependency when it becomes a substitute for employment, assets, public services and institutional reform.

The true measure of success, therefore, lies not merely in the number of women receiving financial assistance, but in whether these transfers enable them to make independent choices about education, healthcare, employment and household spending; strengthen their bargaining power in decisions relating to family finances, children’s education and healthcare, and gain greater control over their economic futures.

Progress towards this is visible in the efforts at enabling growth among women-entrepreneurs – 70 central schemes and 400 state-level schemes are focussing on supporting female-entrepreneurships. Gender budgets have also shown a 429 percent jump in the decade spanning 2013-14 to 2025-26.^[10]

Nearly 50 percent of the registered startups have at least one-woman director, and women account for approximately 68 percent of all loan accounts sanctioned under the Pradhan Mantri MUDRA (Micro Units Development and Refinance Agency) Yojana (PMMY). This highlights their growing participation in entrepreneurial activities through institutional credit. Women owned programmes such as Namo Drone Didi, LakhPathi Didi and PM SVANidhi are also enabling women’s self-reliance.^[10]

The impact of these programmes needs to be studied from various dimensions of empowerment and gendered development outcomes. Such an analysis would bring out the difference between treating women as beneficiaries of development and recognising them as agents of development.

Sangita Dutta Gupta is Professor, School of Management, and Assistant Dean, Research at BML Munjal University, Haryana. Her research spans several areas including development economics, financial economics, gender economics and entrepreneurship. She also serves on the editorial review board of the International Journal of Emerging Markets.

Manjula M is faculty at the Azim Premji University, Bengaluru, where she teaches courses in the broad domains of sustainability and livelihoods. She holds a doctorate in agricultural economics and works on ecological, social and economic concerns of rural livelihoods, intersections of agriculture with gender, climate change and sustainability.

Originally published under Creative Commons by 360info .^[11][12]