Minister Bharrat right on cash grants as a permanent model

Oct 05, 2025 Letters

Dear Editor,

Much has been penned in response to Minister Vickram Bharrat’s remarks (KN Sept 30) about the effectiveness of cash grants or cash transfer. The Minister did not oppose cash grants. He simply stated a fact that it has largely failed to eradicate poverty. The concept of effectiveness of cash grants is largely studied in sociology. The jury is still out on cash grants.

The Minister is right that cash grants will have limited effects to eliminate poverty unless they address underlying structural problems. Cash grants have not really eliminated or reduced poverty. In several countries, including in Guyana, much of the cash was known to be used for temptation consumption (parties, liquor, drugs, etc.) rather than to lift lives. Poverty is reduced through sound policy by providing skills to work to lift themselves out of poverty. Poverty rate in Guyana has been declining but still relatively high.

There are different types of cash grants (or cash transfers) like food stamps, welfare, paying utility bills, social security payments, etc. as in USA, Canada, and developed economies to address poverty. India transfers money to the poor and subsidizes the purchase of certain basic staple foods like grains, oil, and cooking gas. Minister Bharrat was referring to direct cash grants. These forms of basic assistance (transfers or grants) provide food security and improve psychological well-being that one’s family will not starve, and therefore, they can pursue other means to improve livelihood. But cash grants should not be across the board for everyone, only for those in dire need.

The Minister is right about cash grant as a model for social development; while sociologists support it in the initial stages to lift people out of poverty, it is not a sustainable model in third world countries. There are hardly studies on the success of cash grants lifting peoples’ lives. Economists, socio-economic analysts, and policymakers (including in USA, France, Holland, UK, etc.) worry about creating a dependency syndrome and a permanent underclass in doling out cash grants. Critics of the policy in neighbouring T&T say government has created a permanent underclass in certain neighbourhoods with its cash transfer policy. Guyana must be concerned about creating a permanent underclass with cash grants or cash transfers.

Vice President Jagdeo stated that government will honour any promises on cash grants as made on the campaign platform. It should! Politicians should make every effort to honour campaign and manifesto promises, but these must be balanced with sound policies aligned with social and economic development to reduce poverty. Government is already involved in cash transfers – school vouchers, increases in pensions and NIS, etc. While Guyanese, myself included, would be happy to collect cash grants, government should pursue measures to improve the economic standards of the common, poor people as is done in India. It should be done with a combination of cash transfers or grants and through investment in education and training in business ownership (production) so people can lift themselves to higher standards of living. Giving ‘free’ (unearned) money is not an incentive for productivity. People will sit and wait for the money rather than go out and earn more. It is better for government to offer subsidies for education (as is currently underway), provide job skills, create permanent productive jobs, and take other measures that will sustain social development.

Cash grants or transfers depend on the situation or context and desired outcomes. It is not a solution to eliminate poverty or promote national development. It may have the opposite effect of increasing poverty through dependency.

Everyone (particularly the poor) will want cash grants, but they may not be schooled as those of us who study economics on the consequences of grants – fueling inflation, creating permanent dependency, causing internal family conflict over the funds, etc.). There are people desirous of cash grants or cash transfers. Government has to find the right balance of cash grants and how much and who to give in order to reduce poverty and improve health conditions, etc. Otherwise, the underclass will remain in poverty.

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