Covid relief for the poor – too little, too late

REETIKA KHERA and RISHABH MALHOTRA

INDIA faced a threefold crisis in 2020: a severely underfunded healthcare system attempting to deal with the corona pandemic, an economy paralysed by an unplanned and harsh lockdown, and a humanitarian crisis resulting from the abrupt, overnight livelihood shock.

Among India’s employed, less than a fifth (17%) have salaried jobs; many more (about a third) are casual labourers, and about half are self-employed. With 90% of its workforce in the unorganized sector, and niggardly social support measures available from the state, India witnessed its biggest humanitarian crisis since Independence.

State action was delayed and inadequate. We provide here an overview of the measures taken by the central and state governments. Initial apathy later turned into (grudging) action by the central government for the most vulnerable groups. Several state governments moved to top-up central efforts, and also to identify and plug the gaps in the Centre’s relief measures. We focus on primarily relief measures related to programmes of social support: the Public Distribution System (PDS) and the Mahatma Gandhi National Rural Employment Guarantee Act (NREGA), Mid-Day Meal (MDM) scheme, Integrated Child Development Services (ICDS), social security pensions and other cash transfers.

In spite of these measures, millions of households continue to suffer as relief measures compensated for only a fraction of the poorest households’ incomes. Moreover, their effectiveness was blunted by poor implementation. Yet, absent these measures, it is likely that the scale of the suffering would have been even higher.

The major Covid relief measures of the central government and the budgetary support for each in 2020 are outlined in Table 1. Existing social security programmes (e.g., PDS, NREGA and social security pensions) became the backbone of the Centre’s Covid relief package. These account for about 80% of Covid relief. These were augmented with cash transfers (to female Jan Dhan Yojana account holders).

Soon after the first national lockdown was imposed on 24 March 2020, the central government announced that it would ‘double’ the rations for those people who were already covered by the Public Distribution System.1 Initially, this provision was made for three months, and was later extended until November 2020. Along with this, the government also announced that it would provide one kg dal. These measures were called the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).

The government had created a crisis for workers by imposing a sudden lockdown. Many were stranded in cities without work, and without any access to social support. Those with ration cards had left them behind with their families, but many did not have one.

Over a month and a half into the lockdown, in mid-May, the central government launched the Atmanirbhar Bharat. It promised five kg grain per person and one kg chana/chickpeas to migrant workers who were outside the PDS, for two months. The implementation of this was very poor partly because identifying beneficiaries was difficult, though some states had ‘waiting lists’ for PDS ration cards to whom they could provide temporary cards.2

Government data (published in the Monthly Food Grain Bulletin3) suggest that additional allocation under PMGKAY (between April and November) was approximately 60% of regular annual NFSA allocations. Under Atmanirbhar Bharat (May-June), the additional allocation for migrant relief was barely 2% of annual NFSA allocations. Data from two government sources (the Annavitaran portal and Monthly Food Grain Bulletin) suggests that there was no noticeable change in the number of PDS beneficiaries since January 2020.

The PDS currently covers about 80 crore people out of roughly 140 crore. While the PDS top-up served those with access to it reasonably well, the main drawback was that far too many did not have access. According to the NFSA, 50% of the urban population and 75% in rural areas according to the 2011 census, i.e., roughly 66% are supposed to be covered by the PDS. By 2020, PDS coverage amounted to only 60% of the projected population. This means that the PDS under-coverage misses nearly 10 crore people vis-à-vis coverage ratios specified in the NFSA, if the latest (2021) census population was available by now.

The lockdown led to a collapse of livelihoods, and the government could use NREGA to restore them to some extent. For NREGA, there was nothing in the initial relief package.4 Many households would have lost remittance income that came from migrant family members. The crash in NREGA employment in April 2020 due to the lockdown hurt them further. NREGA work resumed from 20 April 2020. On 17 May, the central government allotted additional funding of Rs. 40,000 crores, bringing the total NREGA budget to nearly one lakh crore rupees for the 2020-21 financial year.

While the enhanced funding was welcome, to make good on the legal guarantee of 100 days of work for the 14 crore job card holding families, with a daily wage of Rs. 200, the allocation would need to be around Rs 2.8 lakh crore.5 A significant part of the enhanced funding helped clear the wage and material arrears (ranging from Rs 4,431 to Rs 11,500 crore) of the previous financial year.

For practical purposes, NREGA works are usually closed during the monsoon, partly to prevent competition between NREGA and agricultural employment. In 2020, the government announced that NREGA works would remain open. This was important because households are particularly vulnerable to hunger during the monsoon, as food stocks from previous years’ harvest have been depleted.

At the end of the 2020-21 financial year, according to official data, 389 crore person days of NREGA work was generated, higher than the previous year (265 crore person days) by 47% (see Table 2). In fact, this was the highest number of person days generated since the passage of the act in 2005. Almost the entire increase came from more households getting work, as the average days of work per household (conditional on getting any work) changed little.

Table 2 shows more than one crore new job cards were made in 2020-21, and the proportion of households with job cards that got any NREGA work increased by around 11 percentage points (to 50%). The proportion of card-holding households that got 100 days of work also increased (from 2.9% to 4.7%). As before, vulnerable groups such as women, Dalits and Adivasis got a substantial share of employment (roughly one-fifth), though their share decreased marginally by 1-2% points. A survey by Rapid Rural Community Response to Covid-19 (RCRC) suggests that while households with migrants (vis-à-vis those without any migrant) were more likely to seek work (43% vs 32%), they were less likely to get work – 49% vs 59%.

The government could have gone much further to simplify processes (e.g., opening large worksites proactively in each Gram Panchayat, waiving the requirement to apply for work, etc). Little, if anything at all, was done to streamline NREGA payments. Last mile hurdles in cash payments, such as lack of awareness and access to information on disbursal, high transport and time costs for beneficiaries, Aadhaar related costs and exclusion to name a few, are well documented. Some states had managed to achieve a reasonable balance between worker-centric implementation and smart use of technology.6 The pandemic was a good, but lost, opportunity to strive for regaining that balance again.

Cash transfers were widely seen as the first line of action, even internationally. At first glance, they seem like the easiest and quickest option, but there are some caveats. One, deciding the ‘base’ is not trivial: Who gets the cash, and how much? Two, the possibility of hoarding and price rise may erode the value of cash and consequently how much it helps people. Three, the density of bank branches in rural areas is thin. Earlier problems such as distance and transport to banks, overcrowding, ill treatment, continue. Mass cash transfers create crowding, which in turn could increase the risk of transmission of Covid-19.

Four, there is also a largely unacknowledged issue of a mess in the banking system largely due to the move towards the Aadhaar Payment Bridge System, which results in rejected or diverted payments. Recent data from the health ministry suggested that nearly 10% of direct benefit transfers (DBT) failed due to this payment bridge. Besides this, payments that appear successful on the DBT portal are often misdirected into other accounts. Beneficiaries of cash transfer schemes such as NREGA, students’ scholarships, PM Kisan Yojana, maternity benefits have suffered as a result. Transaction failures in the banking system are common.

Payment of cash in public is an important safeguard against corruption. For years now, Odisha has been paying pensions as cash in hand, at the Gram Panchayat, and is known to have low/no corruption. More recently, Odisha, Andhra Pradesh and Tamil Nadu resorted to cash in hand to PDS ration card holders, without any major complaints (dis-cussed below).

Though cash support was necessary, as it turned out, cash relief from the Centre was niggardly. The Union government decided to supplement the amount provided to pensioners and to frontload pensions as well as PM-Kisan transfers. In addition, a new transfer of Rs. 1500 to female Jan Dhan Yojana account holders was announced.

National Social Assistance Programme (NSAP) is a central programme for assistance through pensions to the elderly (age over 60), widows and disabled. It provides around 3.3 crore beneficiaries with monthly transfers of Rs. 200-500 that state governments can (and often do) top up. For them, relief included advance payments of three months’ pensions, along with an additional amount of Rs. 1000. In all, two tranches of about Rs. 1400 each were released for 2.82 pensioners. A study by Dalberg conducted in April-June 2020 reported that pensioners with disabilities were unclear about the relief provisions, the mode and date of payments. This is a more general problem, but harder for persons whose mobility is restricted by their disability. Another study by Action Aid reported that 58% of eligible pensioners were able to access their pensions during the lockdown.

Here too the central government should have done much more: enhanced its contribution to social security pensions (stuck at Rs 200 per person per month since 2006). It could have moved towards universal social security pensions. Identifying all those who are above 60 years of age, single women, etc. was one way of scaling up cash transfers.

The central government announced cash relief of Rs 1500 for female Jan Dhan Yojana (JDY) account holders, to be given in three instalments of Rs. 500 each. Relying on JDY accounts excluded many poor people. Survey estimates suggest that more than a third of poor women in India do not have JDY accounts, and a quarter of them stay more than 5 km away from the nearest bank. Other estimates reveal that the extent of exclusion is even higher, with more than half of the poorest women being (likely) excluded from cash relief.

Providing cash support is important, and while supplementing pensions is a good choice the main drawback is that it would cover too few people. A critical shortcoming of relying on cash transfers through the PM-JDY scheme (or PM-Kisan) is that they do not reach the poorest of the poor. Giving cash to PDS ration card holders would be a good idea in terms of achieving wide coverage and targeting, but that would mean duplicating support to one group, even while we know that a substantial number of poor are left out of the ambit of the PDS. One possible option that achieves scale and targeting objective is to give cash to NREGA job card holders. These will overlap with other schemes, but go beyond as well.

On a range of crucial issues, the central government was either inactive or made inadequate arrangements. Some of the interesting and effective measures undertaken by state governments including how states supplemented central support through the PDS and NREGA, are documented below.

One critical group ignored by the central government was children and their needs. Anganwadis of the Integrated Child Development Services (ICDS) for children under six and the Mid-Day Meal (MDM) scheme that provide cooked food to school going children were shut down. These provide nutrition support and even time bound essential health services (in the case of the ICDS).

When anganwadis and schools had to be shut down, Kerala initiated dry ration supplies to their homes. When other states also shut down schools and anganwadis, the Supreme Court took suo moto notice of Kerala’s actions. In response, the central government issued notices to state governments, to provide food security allowance that could be cash or food grains with cooking costs (for both ICDS and MDM). Some states (e.g., Jharkhand and Delhi) opted for cash where delays and lapses were reported. Moreover, during the lockdown, when people were being asked to stay home and supply chains were in danger of being disrupted, giving cash made little sense. Several states issued orders on door to door delivery of take home rations. Odisha, for instance, implemented and targeted mid-day meals creatively through PDS fair price shops where parents could get rice after showing proof/coupon issued by the school principal. Chhattisgarh provided dry ration kits that included dal, oil, soya beans along with rice.

There is little systematic evidence on how these measures have fared. Offtake data from the monthly food grain bulletin suggests that offtake by states for MDM and ICDS in 2020-21 increased by 28% over the previous financial year. Evidence from surveys helped identify gaps. A study by Action Aid (in May 2020) among informal workers, mainly migrants, reports that only 24% of eligible respondents got ICDS provisions during the lockdown; in a rural survey by RCRC, 16% of respondents reported that they could not access supplementary nutrition.

Anecdotal reports and small surveys also hint at implementation gaps. For instance, the Gujarat High Court took suo moto cognizance of survey results of a study by IIM Ahmedabad which revealed that among government school going children, 85% parents had no access to any rations for 6+ months since March. An RTI reply from the Government of Uttarakhand stated that 20% children under MDMs didn’t receive any grains in the months of Apr-May 2020 While for some families, the MDM rations helped all members sustain through the period, complaints about the quantity and nutritional value of the food (as MDMs often served eggs) and exclusion remain. At the end of the day, as per available evidence, efforts to protect children – whether by the Centre or the states – did not go beyond tokenism in most states.

The central government seemed entirely at sea with respect to the question of urban workers, many of whom were migrants from distant rural areas. Thankfully, some of this neglect was made up by state action. Community kitchens became an important means to reach stranded workers especially in urban areas. Community kitchens already existed in some states such as Tamil Nadu (Amma’s canteens). Others like Kerala and Delhi quickly scaled up. Kerala organized these through Kudumbashree and Gram Panchayats.7 Community kitchens are not without drawbacks. They can be viewed as demeaning by workers accustomed to earning for themselves and in any case, queuing for each meal could not have been convenient.

States enlisted NGOs and charities to augment relief efforts of district administrations to provide (e.g., supply packets of dry rations to workers and their families who were without earnings due to the lockdown). Dry ration kits were welcomed by workers who had cooking facilities of their own.

States also announced measures to make up for the under-coverage through the PDS. In Kerala, households with ration cards that are not ordinarily eligible to subsidized grain (general or APL cards) were also supplied grains to ensure ‘no starvation’. A total of 88 lakh families (including APL cards again) were provided free grocery kits (comprising spices, grain, sugar etc) for almost a year starting May 2020. Others stopped charging for the regular quota of wheat and rice.

Before the national lockdown barred it, Rajasthan provided free bus travel for migrants workers returning home.

Many states came up with innovative systems to effectively target and reach the vulnerable population. Tamil Nadu in its initial support package attached benefits to PDS and NREGA – a cash support of Rs 1000 to all ration card holding families, two day pay for NREGA job card holders. A token system was also introduced to ensure beneficiaries visit the shops in a staggered manner, and delivery facilities were launched for those under quarantine. Odisha also used its network of PDS outlets to distribute cash to PDS card holders. Telangana provided its ‘white’ ration card holders with Rs 1500 bank transfer.

Fresh surveys of households for ration cards were announced and undertaken (Chhattisgarh, Bihar, Jharkhand). Gram Panchayats were supplied untied grains to give to any vulnerable household. For instance, Chhattisgarh promised ‘unconditional and outright delivery’ in emergencies through the gram panchayat.

In Rajasthan, dry ration packets with five kg grain, half a kilo of oil and salt, 1 kg pulses were distributed free of cost to vulnerable groups such as street vendors and daily wagers. In Kerala, fisherfolk got cash support of Rs 2000. Anticipating the workers that would be most hit, Tamil Nadu government announced Rs 1000 cash plus rice, dal and oil support to registered auto drivers and construction workers.

The second Covid-19 wave in early 2021 has been far more serious in terms of the spread of the disease reaching even rural areas. In 2020, when the central government announced the unplanned lockdown, the humanitarian crisis was in focus and public pressure on the government compelled it to provide some support. This year, the Centre took little responsibility, delegating lockdown decisions entirely to states, many of which are quite stringent in terms of affecting livelihoods of the poor (self-employed as well as casual labourers).

Despite the increased intensity in rural areas this time, the central government did not provide much support. The only major relief was doubling rations through the PDS (Table 1). In spite of the fact that (like 2020) it had 100 mt of grain stocks (that is twice as high as the buffer stock norms), it has not considered expanding the PDS to more people.

State governments found themselves dually responsible for vaccination and relief, and the poor suffered as a result. Among the most affected, Delhi opened up foodgrain access to anyone in need (with an initial cap of 20 lakh). Narrowly targeted cash support (e.g., to construction workers in Punjab, labourers in UP, auto/taxi drivers in Delhi) along with relief for vulnerable groups (e.g., dry rations to children in Chhattisgarh and migrants and other poor in Tripura, Karnataka). Some states (such as Kerala and Tamil Nadu) announced relief in the form of cash transfers (say, through the PDS) as well as in kind. Most states could not do much partly because of their financial situation.

During the lockdown, an estimated 224 people died due to starvation and financial distress, 47 from exhaustion and 96 in Shramik trains that were supposed to help migrant workers reach home. This is the tip of the iceberg as far as the suffering from the triple crisis – pandemic, livelihoods and humani-tarian – is concerned. Apart from the economic setback, there is also the prospect of a long-term increase in chronic inequality as education and health needs of a whole generation have taken a hit.

In its Covid relief package, the government did well to use the existing welfare infrastructure. For instance, it provided in kind support through the PDS, livelihood support through the NREGA, cash relief to vulnerable individuals through the Jan Dhan Yojana and National Social Assistance Programme. The response provided a glimpse of what a well rounded welfare system might look like, in the sense of having a variety of interventions (cash, in kind, and work related).

This existing infrastructure, however, could have been used much better. One, the scale of relief (especially cash) could have been higher. Two, the same infrastructure could have been used to provide more diversified support (e.g., the PDS could have been used to supply dals, oils and other food items at subsidized prices). Three, some states demonstrated that for children, in spite of the constraints, the government can do more through anganwadis and schools (e.g., provision of dry ration kits including nutritious items such as soya bean, eggs, etc). Four, the pandemic exposed a major gap in our welfare measures – the working poor, especially migrant labour to urban areas – where new interventions need to be put in place. Five, last mile hurdles (such as Aadhaar based biometric authentication for PDS grains) were widespread and continued to exclude poor households, even at a time that called for unhindered access.

During the past year, even its harshest critics have come to appreciate the importance of India’s welfare architecture. In this way, there is a similarity with post- World War II Europe, where a consensus in favour of a robust welfare state emerged leading to its establishment in the ensuing years. In India, the pandemic has exposed the fragility of our existing mechanism and shown the urgent need to universalize some programmes (e.g., pensions, rations), scale up the existing levels of support, and plug the gaps in our welfare machinery (e.g., workers in cities). Such course correction in the coming years can be one way of not only healing the wounds of the pandemic, but building a robust welfare system for the future.

Footnotes:

* The full version of this paper was written for a book edited by Yogesh Jain, who has kindly agreed for this to be co-published in both places. We thank Jean Drèze for detailed comments and suggestions.

1. For priority households, this was an exact doubling from 5 to 10 kg per person per month. Antyodaya households were only given an additional 5 kg per person per month, adding on the regular entitlement of 35 kg per family.

2. Delhi, for example, did develop a portal to issue coupons to non-NFSA beneficiaries. News reports suggest that Chhattisgarh issued 1.92 lakh new ration cards, though it is not clear whether these were valid temporarily. Odisha had a pre-existing application to whom the state reportedly issued five lakh new cards.

3. Analysis from different monthly reports (from https://dfpd.gov.in/food-grain-bulletin.htm) are used throughout the paper.

4. Though the finance minister did say that NREGA wages were being increased by Rs. 20 per day, in fact, this was a routine annual increase (announced earlier) brought into effect as a relief measure.

5. Estimate assumes that all job card holding families demand 100 days, a likely scenario in the circumstances.

6. The measures covered in this section are not exhaustive. Preparing an exhaustive state-wise list might not be possible, but https://covid-india.in/ compiles many of the orders issued by various state governments.

7. According to the 29 June 2021 Supreme Court order in the workers case (Writ Petition (Civil) No. 6 of 2020), Karnataka, Kerala, Telangana (140 canteens), Punjab (38), Delhi and West Bengal (150), Madhya Pradesh (100) and Maharashtra ran community kitchens that provided highly subsidized meals (say, at Rs. 5 or Rs. 10).