Globally, decades of research have shown that income placed in the hands of women generates far larger household welfare gains than equivalent money given to men. India is testing this at an unprecedented scale. By 2025-26, more than 15 states had unconditional cash transfer schemes for women, costing roughly ₹1.7 trillion and reaching almost 120 million beneficiaries.
Yet, rigorous evidence on what these transfers achieve beyond political optics has been scarce. We examined the Mukhyamantri Majhi Ladki Bahin Yojana in Maharashtra and Subhadra Yojana in Odisha to understand how such transfers affect household finances.
Both schemes were introduced in 2024. Odisha’s Subhadra Yojana provides ₹10,000 annually in two instalments to women aged 21-60 in households earning below ₹2.5 lakh per year. Maharashtra’s Ladki Bahin Yojana offers ₹1,500 monthly to women aged 21-65 under similar income criteria.
Our empirical analysis employed a difference-in-difference (DiD) framework to approximate the logic of a randomized control trial in observational policy settings.
First, both schemes produced large statistically significant improvements in household savings—an 84% rise in average month-end balances in Maharashtra and 45% in Odisha, with the two estimates converging almost exactly in rupee terms, despite different transfer structures, offering us strong cross-programme validation.
Second, these transfers raised spending, though not enough to exhaust the income gain. In Maharashtra, monthly expenditure rose about 46%, implying a marginal propensity to consume of about 0.9, which means that about 90% of the ₹1,500 transfer was spent. Odisha’s spending rose about 28%. These findings suggest that predictable cash transfers have strengthened household liquidity, consumption support and short-term financial stability.
Third, on average, older beneficiaries saved more, while younger ones spent more. In Maharashtra, women aged 55-59 recorded the highest savings increase (91%) while those aged 45-54 showed the largest spending rise (47%). Odisha displayed a similar pattern—women aged 45-59 had the largest balance gain (46%) while those aged 21-29 had the highest spending increase (29%). Older women appear to be building precautionary medical savings, while the middle-aged use these funds for immediate household needs.
Fourth, transfers benefited the least educated and most financially constrained women the most. In Maharashtra, savings rose 85% among illiterate beneficiaries, 95% among under-matriculates and 80% among matriculates; spending rose by 56% among under-matriculates and 33% among illiterate beneficiaries. In Odisha, illiterate beneficiaries saw a 73% savings rise, compared to 23% for matriculates.
Fifth, spending composition shifted towards welfare-improving categories. Transaction-level analysis using Merchant Category Codes shows that among Ladki Bahin beneficiaries, ATM-based education spending rose from 18% to 24% of total cash spending—the largest single shift. In UPI transactions, lifestyle spending rose from 37% to 42%, and medical spending from 8% to 10%.
Sixth, the schemes accelerated digital financial inclusion, with UPI adoption rising significantly among beneficiaries.
Seventh, the financial benefits extended beyond direct recipients to their male household members. In Maharashtra, relatives’ month-end balances increased by about 23%. At the same time, their monthly spending declined by about 49%. Before the transfers, male relatives were partially financing women’s consumption. Once women began receiving cash, this implicit obligation ended, so men could save more. Thus, total household welfare improved for everyone.
The benefits of cash transfers stretch beyond household balance sheets. Global evidence has long established that income in women’s hands does not stay in women’s hands alone. It flows outward into the health, nutrition and education of the next generation.
India’s own research confirms this channel: women’s asset ownership improves children’s nutritional outcomes, and direct income for female workers is associated with better child health. With these inter-generational effects operating alongside gains in savings and consumption, the long-term welfare dividend from India’s cash transfer expansion is likely far larger than assessed.
This makes the following policy recommendations not just sensible but urgent.
First, such programmes should evolve towards a cash-plus architecture, combining income transfers with voluntary digital literacy support, self-help group linkages and access to basic financial planning.
Second, the transfer amounts must be reviewed periodically in line with inflation.
Third, targeting precision should be strengthened progressively and the gains from eliminating ineligible recipients must be re-invested in enhanced benefits for deserving women, not absorbed into fiscal savings.
Fourth, the spillover evidence from this study makes a strong case for tracking household-level outcomes, not just beneficiary-level, so that the overall welfare dividend, including the positive effect of transfers on the well-being of male relatives and children, is properly measured and reported.
These are the authors’ personal views.
The authors are, respectively, member, Economic Advisory Council to the Prime Minister, member, 16th Finance Commission and group chief economic advisor, State Bank of India (SBI); and economist, SBI.