Welfare schemes need tweaks to accommodate Covid-19 impact

23 Mar 2020

The schemes in place for essentials like food healthcare and income support should be appropriately modified to minimise economic burden on the affected communities.

Opinion: Bornali Bhandari

Our economic and social lives as we know it have been thrown in disarray. While some of the productive activity in the services sectors has moved to ‘work from home’ it is difficult to move the manufacturing sector home. At this point both households and firms need economic support. A complex country like India needs economic policies to guide it through difficult times both during and after the crisis. Here are some possible social welfare policies for households that can be implemented during the crisis.

As firm after firm industry after industry shuts down with possible increase in unemployment without pay it is absolutely imperative that the Central and State governments focus on social welfare in these tough times. This would be even more imperative if the country moves from Stage 2 to Stage 3 of the novel coronavirus (Covid-2019) outbreak viz the spread of community transmission. In any case approximately 92 per cent of our labour force is in the informal sector.

The developed countries are looking at cash transfers for households and postponing payments. Closer home Kerala has come up with a comprehensive social welfare package for the State involving the public distribution system income transfers cooked food and the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). In India transferring of social welfare benefits has involved the Direct Benefit Transfer (DBT) mechanism which has matured over the years.

When it comes to formulating schemes we must return to the three basic questions in economics – what how and to whom? Given the urgency of providing support quickly in the next week or so we have to focus on schemes which can achieve scale efficiency and timely delivery with already existing matured processes.

The two key things that any human being would need to survive in these tough times are food and medicine. We have two working schemes in place that fit the criteria PDS and Ayushman Bharat. Other schemes are the National Social Assistance Programme (NSAP) and the MGNREGS. An income support scheme for unemployed urban workers would also be needed. The tweaks needed in the schemes are given below and proposed only for the first quarter of 2020-21.

Food: The PDS would need two major tweaks to serve the current objectives. First it needs to be made universal or semi-universal. This obviates the need for any kind of authentication biometric or otherwise. Second one could potentially offer additional food products via the PDS for a more holistic nutrition. These changes need to be implemented by the Central government. Right now State governments can only increase support for existing PDS beneficiaries.

Health: All citizens which do not have health insurance should be encouraged to sign up for the Ayushman Bharat scheme for the first quarter with any co-pay costs borne by the government. The scheme should cover Covid-19 with tests medicines hospital admission etc. This should be implemented by the Central government.

Senior citizens at least should be provided free medical tests and medicines for non-Covid-19 diseases similar to the Aam Aadmi Mohalla Clinics in Delhi. The State governments can play a larger role here.

Telephonic or digital support to all citizens is critical. The local communities at the municipal and gram panchayat level can ensure that helplines are working with support staff round the clock.

Income support: The NSAP for senior citizens and disabled citizens may be enhanced. The in-cash DBT mechanism at work may be used for this. Although this is a Central government scheme and must be tweaked by it many States also provide additional support. They too can increase their share.

The biggest challenge in providing income support for urban unemployed workers is that there is no working database for reference. To quickly deliver benefits employers’ help could be sought. The employers with their unique identifiers could help fill up the forms online for laid-off employees with the necessary details for in-cash DBT monthly transfers for three months. This could be implemented by the State governments.

Farmers and rural workers: Rural labour whether in the agricultural or non-agricultural sector would need support. However increased work at rural areas via the MGNREGA may result in less social distancing helping the spread of Covid-19. Hence the MGNREGA may continue without tweaks. In-cash DBT mechanism may be used here too.

For farmers fertilisers subsidy may continue albeitwithout biometric authentication. This tweak has to be implemented by the Central government.

The point is that alternative mechanisms for transfer of social welfare benefits at scale are available in India. They are being leveraged by Central and State governments in myriad ways. With some tinkering each of them (individually or together) could potentially be used to provide holistic support to all citizens.

The writer Bornali Bhandari is a Senior Fellow at the National Council of Applied of Economic Research. Views are personal.

Published in: Business Line, March 23, 2020