Impact of cash transfer program on agricultural input spending: evidence from Telangana

This study estimates the causal effect of an unconditional cash transfers program for farmers, launched by the state of Telangana in 2018, on agricultural input spending. It uses data from the National Sample Survey’s 77th round (2018–19), conducted immediately after the program’s rollout, and applies propensity score matching to identify causal impacts. The results indicate a 38% rise in agricultural input spending for the average treatment effect. After correcting for selection bias, the average treatment effect on the treated shows a highly significant 17.5 percentage point increase in input spending by beneficiaries. The evidence also suggests that the program facilitated a shift from imputed to hired labour and led to higher fertilizer use. From a policy perspective, the findings suggest that while cash transfers raise short-term input spending, sustaining these gains requires predictable transfers that complement input subsidies and credit to promote farm investment and rural transformation.