Is Bharat Ready to Buy?
Rise of Women-Focused Cash Transfers in India: What It Means | Part 1
While campaigning for the Bihar state election in 2015, the leader of Janata Dal (U) made a rather unique promise to the crowd, one that few would have anticipated. He declared that if he won the election, alcohol would be banned in the state of Bihar. As it turned out, his party and alliance secured a sweeping victory, and he returned as Chief Minister. True to his word, alcohol was officially banned in the state starting April 2016.
His name is Nitish Kumar, and the reason he made the ban a central part of his campaign was the growing demand from women across communities, who were increasingly vocal about the rising abuse and addiction linked to alcohol. In the previous state election of 2010, Bihar had already witnessed a watershed moment when the turnout of women voters (54.85%) surpassed that of men (50.70%) for the first time. Nitish knew exactly what he had to focus on.
So, Nitish Kumar promised a liquor ban to curb alcohol abuse and women voters responded overwhelmingly. In the 2015 Bihar elections, female voter turnout jumped by 5% to nearly 60%, once again surpassing male turnout. While women-centric initiatives around welfare, education, and health had existed in several states before, this moment marked a turning point in Indian politics. For the first time, women were not just passive beneficiaries but were actively targeted with a populist policy - the liquor ban - as a vote bank in their own right. And the results were nothing short of remarkable.
(Note: Our intention here isn’t to compare or portray any political party negatively, but to frame our investment strategy based on how the government chooses to spend, which we are tracking in this blog)Since then, more and more state elections have seen political parties specifically targeting female voters, often with decisive results. A recent example is the 2023 Karnataka elections, where the Congress Party secured a historic victory, thanks in large part to a surge in support from women voters. This support was driven by the party’s promise of monthly cash transfers of ₹2,000 to over 1.3 crore women under its flagship ‘Gruhalakshmi’ scheme, along with other benefits like free bus travel.
Here’s a podcast that explores how the importance of the women vote bank has grown over time, and unpacks the broader political implications of such direct cash transfer programs:
This is exactly where we're focusing in today's blog which is Part 1 (followed by Part 2 in next blog) - tracing where this money is flowing and how it could act as a catalyst for boosting rural consumption, a trend we’re increasingly keen on betting behind. Let’s get started!
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Why Women Vote Bank Matters!
For decades, female voter turnout in India lagged behind that of men, but this trend has changed dramatically over the past two decades. According to SBI Research, starting from 2029, women are expected to consistently outpace men in electoral participation, with the gap widening in subsequent elections. By 2047, they project that of the total votes that are casted in elections: women will comprise 54% of voters, compared to 46% men.
This marks a tectonic transformation in India’s democratic landscape. With overall voter turnout estimated to reach 80% (roughly 92 crore people) - SBI forecasts about 50.6 crore women and 41.4 crore men will cast their votes in 2047. The implication is clear: securing the women vote bank will be more crucial than ever. And with direct benefit transfers (DBTs), especially cash transfers, becoming the centerpiece of welfare politics, this strategy is likely to define electoral playbooks and therefore government budgets for decades to come.
With women emerging as a decisive voting bloc, especially in rural and low-income segments, political parties are increasingly leveraging welfare schemes not just for social upliftment but as powerful electoral tools. This marks a strategic shift in India’s welfare politics, where economic empowerment of women is directly linked to political dividends at the ballot box. As a result, politicians across party lines now find themselves in a competitive race to offer more generous and targeted direct cash transfers than their rivals, making women-centric DBTs a cornerstone of modern election strategy.
Debate On Economics No Longer Exists
The political debate around freebies, especially cash transfers, has had a quiet death in India. Until 2022, top leaders of the Bharatiya Janata Party (BJP), the largest political party in the country, were firmly against the freebie culture. They argued that poll promises should be realistic and not come at the cost of long-term development. BJP leaders had even backed a Public Interest Litigation (PIL) in the Supreme Court, seeking curbs on political parties promising what they called ‘irrational freebies’ during elections. Their stance was that such offers distort voter choices and place an unsustainable burden on public finances. The following statement and video reflect that position clearly.
“This ‘revdi culture’ (freebie culture) is very dangerous for the development of the country… Those who promise free revdis for votes will never build new expressways, airports, or schools.”
- Shri Narendra Modi, India’s Prime Minister (July 2022)
The party that, until 2022, openly criticized freebies and mocked opposition parties for offering them, entered the race with full enthusiasm in 2023. In several elections, it either matched or even exceeded the promises made by Congress. A clear example was Shivraj Singh Chouhan’s campaign in Madhya Pradesh in 2023, where monetary pledges were the main focus. According to an ET article, in nearly every election rally, the then Chief Minister emphasized the ‘Ladli Behna scheme’, highlighting how women aged 21 to 60 were receiving ₹1,250 per month, and how he intended to raise it to ₹3,000. As "Mama" (a name Chouhan is fondly called) listed the numbers, the crowd cheered. This demonstrated a growing political consensus that direct cash transfers have become one of the most effective tools to win elections.
In all major state elections held after 2022–23, cash transfer schemes emerged as the biggest game changers, influencing voter sentiment and outcomes across states such as Karnataka, Maharashtra, Himachal Pradesh, Haryana, Delhi, Odisha, and others.
Up Only Up - This Expenditure won’t Stop
In August 2024, the JMM party led Jharkhand government quietly rolled out the Maiya Samman Yojana, offering Rs 1,000 a month to women aged 18 to 50 - a modest step aimed at easing household burdens and signalling support for female voters. But as election season drew closer, the political stakes quickly intensified. The BJP, eyeing a comeback, promised Rs 2,100 per month to women under its proposed Gogo-Didi Yojana, throwing down the gauntlet.
Then in a swift counter, the ruling coalition dramatically raised the Maiya Samman payout to ₹2,500 from December, turning a quiet welfare scheme into the centerpiece of its poll pitch. What began as basic support had now become a high-stakes political contest.
As of 2024 ending, 14 states have now announced income transfer schemes for adult women, taking annualized spend to 0.6% of GDP, with 20% of total Indian women benefiting (34% of women in the 14 states).
An expenditure that barely existed before Covid is now costing the exchequer ₹2 lakh crore annually. It is striking that a country still grappling with gaps in basic public infrastructure has so rapidly shifted toward cash-based welfare. In fact, this rising welfare burden has come at the cost of capital expenditure in 5 out of the 12 states that have implemented such schemes so far.
“But once a freebie is given, no political party will dare to withdraw it, fearing a backlash”
- Pronab Sen, former Chief Statistician of India (source)
While these are still early years, Karnataka has already seen cash transfer scheme is now one-fifth of its Revenue Expenditure budget (non-committed). States like Maharashtra, Madhya Pradesh & West Bengal are not behind as the below chart shows. Aam Aadmi Party in Punjab has been unable to implement the scheme due to fiscal situation of the state.
Why could Rural Indian Economy benefit the most?
Cash transfer schemes affect ~34% of women in the target states, and assuming efficient targeting (i.e., only the bottom 34% get it), the boost to household expenditure could be 5-45% as per Axis Capital. They also estimate that expenditure by households rising 45% in the bottom 10% beneficiary households of Jharkhand where the state has finalized a sum of Rs 2,500 per month per women.
While 64% of Indian population resides in rural India, about 75% of India’s unpaid women are present in rural India. If we further apply the family income & other criterias for being eligible for Cash Transfer scheme, it comes to estimated 80-85% of beneficiaries residing in the Rural India, which is essentially the core vote bank that all politicians are targeting.
As per another research by SBI, beneficiaries at merchant outlets in comparison to non-beneficiaries sample in Madhya Pradesh, with both sample households having a nearly identical class, post transfers spending differs by at least ~Rs 9302 (Rs 13034 net of Rs 3732) - roughly a 3.5 times jump. This essentially means that beneficiaries prefer consuming when given an additional income than saving it in their bank accounts.
Moreover, any additional income disincentivizes the rural workforce to migrate to cities and seek employment. We have seen the workforce engaged in agriculture rising from 42.5% in 2017-18 to about 46.1% of 2023-24 which is surprising to many economist. Our fresh migration rate to urban areas is also sharply falling as well, as per EAC-PM report. We have studied the implications of this in form of possible structural rise in wages in one of our recent blog:
The Big Booster is still pending
As we publish this blog, India’s most populous states like Uttar Pradesh and Bihar are yet to implement any women-specific cash transfer scheme, and no central-level women’s cash transfer program has been launched either. This is what we expect to change in the coming years.
Bihar’s November 2025 elections could become a battleground similar to Jharkhand’s 2024 elections, where parties had to outbid each other to win. Recently, in June 2025, the Chief Minister announced increasing the monthly installment of the Social Security Pension Scheme, raising the pension for elderly, disabled, and widowed women to Rs 1,100, a substantial jump from the earlier Rs 400, benefiting over 1 crore women in the state. Read more about recent developments here.
Similarly, in early 2027, Uttar Pradesh will go to the polls. In the 2024 national elections, Akhilesh Yadav’s Samajwadi Party won more seats than the BJP in the state. Losing Uttar Pradesh elections is not an option for any party looking to gain an early edge for the 2029 national elections. Akhilesh Yadav has already promised a Cash Transfer scheme for UP women if voted to power in 2027.
And then, in the first half of 2029, we will have our next national elections, and it is highly likely that by then, a centrally funded cash transfer scheme for women will be in place. Overall, the current spending on such schemes, about 0.6% of India’s GDP, could potentially rise to 2% to 4% of GDP before 2029, acting as a significant boost to rural consumption.
End of Part 1
In this blog, we discussed the clear rise of populism in India, with broad consensus among all parties on the importance of direct transfers to women. This shift is driven by the growing influence of the women vote bank, which is now playing the most decisive role among all sections of society. Politicians simply cannot afford to ignore it, or they risk losing elections, and there is no going back after a scheme has been implemented.
With 80–85% of beneficiaries of such schemes residing in rural India, these transfers have the potential to increase monthly household expenditure by as much as 45% in states like Jharkhand. This could have significant implications for shifting consumption patterns at the bottom of the pyramid.
Therefore, in Part 2, we will focus on why mass consumption brands with a rural focus could outperform in the years to come, and where we are placing our bets to play this theme. The share of rural India in total FMCG sales is about a third currently, but is starting to grow much faster in recent quarters. More on this coming your way, stay tuned for the Part 2!
We hope you enjoyed reading our analysis. Connect with us on LinkedIn here: Aditya Grover and Kinjal Karwa.
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We are not a SEBI registered advisors; personal investment/interest in shares can exists for any company mentioned above; this isn’t investment advice but our personal thought process; DYOR (do your own research) is recommended; Investing & trading are subject to market risk; the decision maker is responsible for any outcome.
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Loved it. Awaiting 2nd blog post eagerly 😍