Cash transfers: There is a way out
We simply do not have data. This was the explanation repeatedly offered by officials of the finance ministry, including the finance minister (FM) herself, for failing to provide generous cash relief in the economic package to migrant workers who’ve lost their incomes and are fleeing cities.
Implicit in this explanation is an important admission of how broken the welfare system is. Indeed, decades of unconscionable political and policy neglect have rendered India’s urban and largely informal migrant worker population invisible to the welfare system. We do not have data on migrant workers. This lack of data is also an admission that despite all the hype around the Jan Dhan-Aadhaar-Mobile (JAM) trinity and direct benefit transfers, the real challenge in the welfare system is that it fails to reach a large segment of the poor. Opening bank accounts and making direct transfers will not ensure that welfare benefits reach those who need it. It will only ensure that benefits reach those who have entered the government’s database. Determining who is poor, identifying, and targeting vulnerable populations, and designing appropriate social insurance is the problem India has refused to solve.
But in this hour of crisis, when governments around the world are expected to raise the game and do what it takes, should past failings prevent a good faith attempt at finding quick solutions?
Consider the challenge of reaching migrant workers. It isn’t as hard to find migrant workers as the ministry claims it is. In fact, once the lockdown was imposed, several arms of the administration from the panchayat to the Centre have been forced to collect data on migrant workers. To facilitate their travel home, the ministry of railways and state governments have set up portals that require travellers to enter data on names, destination, and phone numbers. State governments have collected data for e-ration cards (temporary ration cards) and emergency apps to send relief. Bihar, for instance, has a list of over 1.3 million workers who registered on a specially designed payment app in the first phase of the lockdown. Gram panchayats in many states have developed lists of “returnees” for contact tracing and quarantine purposes.
For migrant workers who slipped through the data cracks, the economic package announcement to extend ration to all migrant workers (80 million, according to the finance ministry), can be leveraged. In the course of the next few weeks, migrant workers and others who do not have ration cards will likely make their way to ration stores for food grains. The ration store can become the site for registration. Polling booth level officers can be deployed to sign up “non-ration” cardholders and make a database.
These lists will not be exhaustive, and there may be a duplication of names. But they are a starting point. With speedy data-sharing across different lists, duplication problems can be resolved. The National Disaster Management Authority has set up a portal that can be activated for this purpose.
There remains the challenge of getting cash out. Many workers may not have bank accounts, and for those who do, access is difficult since the banking network in much of rural India is thin. Several suggestions are on the table for converting direct benefit transfers into direct cash transfers where needed. States such as Kerala have been using the postal service to deliver cash. Others are experimenting with banking correspondents and local governments for cash distribution. These experiments are a reminder that the best way to reach people is for the government to go local. To administer cash transfers, states should be allowed to work out the delivery mechanism. Some may choose to do this through the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) where rural returnees are high in number. Others may want to implement a direct cash transfer or use the funds for an urban employment programme. These are decisions best left to the states.
This is an illustrative list of ways in which cash transfers can be made. The point is: Don’t wait for the perfect database. The bare bones are in place. It can be done now.
So what has stopped the FM? The obvious answer is political will and associated choices that prioritised fiscal conservatism and supply-side measures. But this politics found legitimacy in what my colleagues Mekahala Krishnamurthy and Arkaja Singh described as the “hardwiring of our welfare architecture” that dominates bureaucratic perceptions of welfare programmes. The welfare architecture has been built on the back of deep suspicion of people and the bureaucracy. The need to curb discretionary behaviour of corrupt officials and local elites has entrenched the belief that local discretion must be curbed. Panchayats may be best placed to identify the poor and deliver benefits, but the fear of corruption has meant we’ve never trusted them; preferring to device centrally-controlled databases and beneficiary lists. No surprise then that, in the absence of a database, the bureaucracy couldn’t imagine how to transfer cash to those who never made it to a database. The only concession given was an increase in MGNREGS allocations. But here too, absent a new imagination, databases will prove a hurdle for returnees who do not have job cards and are not on the centrally controlled e-muster roll to participate.
This limited bureaucratic imagination has legitimised the government’s refusal to find solutions that can ensure protection for those hardest hit by the lockdown. The choice of emphasising reforms over economic survival is flawed. The lockdown has exposed faultlines in society, and the extreme vulnerabilities of most Indians. Reforms are necessary but, first, India needs to repair as an economy, a society and a democracy. Relief for survival is a moral imperative and an economic necessity. The failure to do so will hurt the country far more than the charge of fiscal profligacy and some corruption in an emergency.