How Much Indonesian Conditional Cash Transfer Reduce Poverty Rate?

Wednesday, 13 July 2016: 09:45
Location: Marietta Blau Saal (Main Building)
Oral Presentation
Fisca AULIA, Ministry of National Development Planning, Indonesia
Riski PUTRA, Ministry of National Development Planning, Indonesia

                Conditional Cash Transfer (CCT) is one of the well-known poverty reduction programs that has been widely adopted by many countries in both developed and developing countries. The program that usually focus on improving the health and education aspects for beneficiaries has been a subject of research study by many scholars and donors, yet only a few of them relating the impact of the program directly to the poverty rate. Despite the impact of this program that usually can be seen in the long term, a program simulation is pivotal to do to decide whether the government need to raise the benefits for the recipients or to expand the coverage or to do both. CCT in Indonesia has been designed so the recipients are expected to escape from poverty after 6 years. Many studies regarding the CCT program in Indonesia have been done by the World Bank concluded that the CCT has increased per capita consumption by 3.3 percent. However, this number is not significant compare to that in Colombia which had 14% impact of CCT on consumption. This program has also had an impact on health and education in Indonesia, but one question has emerged, how much this program can reduce the poverty rate? This paper is trying to answer the question as well as to discuss the strengths and weaknesses of the program by using an ex-ante simulation with many scenarios. The simulation program in Indonesia surprisingly shows that the current program does not reduce the poverty rate, yet this program reduce the inequality among the poor.  Government has also created other programs as the continuation of CCT to help the graduate people generate the sustainable income by doing some productive economic activities as well as maintain their positive behavior toward poverty.