New Delhi, May 5 (PTI) Cash transfers by states, coupled with the Centre’s welfare benefits, can cushion household consumption in the current fiscal year even as the economy sees inflation risks from high energy prices and El Nino, Crisil said on Tuesday.
As many as 17 out of 28 states and a Union Territory (Delhi) will provide monthly cash transfers this fiscal, compared to a mere four in 2019, even though the fiscal costs of states are increasing, as can be seen from their rising debt levels since 2025.
In fiscal 2026, gross market borrowing by states jumped 15.2 per cent year-on-year (faster than the Centre) to Rs 12.4 lakh crore, a key pain point for the bond market. Of the 164 states giving cash transfers, 12 recorded double-digit growth
in market borrowing in fiscal 2026.
The Centre’s gross market borrowing, on the other hand, grew 4.3 per cent in fiscal 2026. Some key welfare benefits by the Centre towards low-income households include free foodgrain, cash transfer to farmers under PM Kisan, and rural employment under the VB-G RAM G scheme.
“For households in the bottom 20 per cent consumption segment, a monthly cash transfer of Rs 1,500 could have covered 74 per cent of monthly expenditure in rural areas and 51 per cent in urban areas in 2023-24,” Crisil said.
While cash transfers can provide a short-term buffer, improving income prospects are critical to spur organic growth in domestic demand, it added.
Crisil said the cash transfers doled out by more than half of India’s states have become an additional income source for low-income households with a high propensity to consume. While the quantum of cash transfers varies across states (ranging from Rs 1,000 to Rs 2,500), the median amount handed out each month is Rs 1,500.
Crisil said such cash transfers are aimed at low-income households (income thresholds varying from Rs 1 lakh to 3 lakh per annum).
How a household used the amount would depend on their economic situation, age and other consumer preferences. The household can use it to either increase its consumption, or maintain consumption in times of economic stress (higher inflation or employment loss), or save, or pay past debt.
“Rs 1,500 in additional monthly income can improve the consumption profile,” Crisil said. PTI JD BAL BAL
