Paying out or paying off India's poor?

The Indian government is handing out cash to the poor as part of a phased rollout of a scheme designed to replace some 30 welfare programmes. Initially 200,000 people in 20 districts will receive the money, but the government plans to cover the whole country by the end of 2013.

"Nothing less than magical, and a game changer for governance" is how India is selling the ambitious scheme in which an estimated 90 million households stand to receive around $58bn in cash.

Those living below the poverty line will receive between $542 and $723 a year.

"If the government is raising such a high hope [among] the poor that they will get cash in the bank account, and if the government is not able to deliver that by the end of the year I think the consequences will be quite severe …. So you have to believe that the government would try its best to deliver what they promised just because of the [upcoming] election." -Parth Shah, the director of the Centre for Civil Society

Palaniappan Chidambaram, the Indian finance minister, told a news conference that the money is to be paid directly into people's bank accounts, cutting down on bureaucracy and cutting out corruption: "We are confident that the monies under these schemes will be successfully credited to the bank account of the beneficiaries. As far as bank accounts are concerned, our assessment is that by-and-large all the beneficiaries under these schemes in these districts have a bank account."

At this stage cash transfers will cover things like scholarships and pensions. It is seen as more efficient and less susceptible to corruption than subsidies.