Reimagining India’s welfare toolkit
Universalise PDS, make it demand-driven; give more funds to states; and ramp up MGNREGS
I pen this column with a depressing sense of deja vu. Back in late March as India went into lockdown, I wrote in these pages of the urgent need for the State to change the rules of the game, avoid red tape, improve Centre-state coordination and adapt agile administrative processes as it sought to provide relief measures in response to the economic crisis unleashed by the lockdown. Of course, the expectation was that the Centre would be far more generous with its purse strings than it has been thus far. But five months on, a report in this newspaper, underlining that only a quarter of the 800,000 million tonnes of free grain allocated to migrant workers has been distributed, serves as a sad reminder that the State has demonstrated neither fiscal generosity nor a willingness to change the rules of the game. The economic crisis, too, is only deepening. It is, therefore, worth revisiting the arguments, made five months ago, and once again press for the urgency of response.
First, universalise the public distribution system (PDS). Expanding the much-maligned PDS, which remains a lifeline for many, was the first thing the Centre did post the lockdown. This has now been extended to November. But the government stopped short of universalising PDS i.e, making grains available on demand, including to those who did not have ration cards.
In May, when it became impossible to hide from the enormity of the migrant crisis, the PDS entitlement was extended to 80 million migrants, many of whom do not have ration cards. But for a system obsessed with paper work and “identification,” this extension did not translate into ease of access. Rather, it created its own red tape associated with identifying migrants and issuing temporary ration cards. To their credit, some state governments have tried to resolve this through local surveys, issuing temporary ration cards through online portals and so on. But each of these processes is cumbersome, time-consuming, and creates new forms of daunting paperwork within government. This is one reason why only mere 18% of the targeted 80 million migrants have received benefits.
And it’s not just migrant workers. According to estimates by Reetika Khera and Jean Dreze, even in ordinary times, nearly 100 million Indians who are entitled to PDS are excluded from it. In other words, they do not have ration cards, which prevents them from accessing PDS. Surveys highlight that only a small proportion of those without ration cards have been able to access grains through PDS system since the lockdown.
The answer, as this column argued in March, is to universalise PDS. Rather than expecting potential beneficiaries to “enroll” or present temporary ration cards, PDS grains should be given to anyone who demands it. It is possible to introduce checks and balances against duplication and corruption at the PDS store. But first, the State needs to shed its passion for paper and “identification”, recognise the crisis and make PDS “demand-driven”. Rather than pursuing the “one nation, one ration card”, which is no more than a delivery instrument, governments need to work together urgently to universalise access to PDS , at minimum, till we get past the current economic crisis.
Second, there needs to be flexibility in the movement of funds to states. States are at the frontlines in the Covid-19 battle, but they are experiencing the pandemic and its economic consequences in a differentiated manner. What states have needed from the onset of this pandemic is access to a flexible pool of resources. Given their fiscal constraints, most states have requested the Centre for a Covid-19 relief grant to make up for the shortfall in revenues. But the Centre has chosen to respond with limited resources, through a centralised relief package, leaving little room for flexibility. So, for instance, if a state needs to replace the Mahatma Gandhi National Rural Employment Scheme (MGNREGS) worksites with cash transfers, in the peak phase of the infection phase, it can’t do so. The centralised architecture has left states with little money, and also given them a ready excuse not to respond as innovatively as needed to the economic crisis while parallely diluting labour rights. Going forward, India needs to evolve a dynamic, decentralised, institutionalised structure that is responsive to the nature of the disease. A Covid-19 grant to states will need an agile fiscal transfer formula akin to a pooled insurance system that is responsive, in real-time, to state needs. It also needs a coordinated effort across states. The inter-state council is the institutional mechanism to do this. It urgently needs to be revived. Finally, the Government of India cannot escape spending more towards the provision of income support. The tentative resilience in the rural economy is linked to MGNREGS.
With most micro, small and medium enterprises operating at 50% capacity and sowing season coming to an end, MGNREGS demand will surge even more. But money is fast drying up. States have already spent one-third of the funds allocated to them for the year. Many have not been able to keep up with demand under the scheme. An urgent infusion of funds into MGNREGS and expansion of work is essential.
There is ample evidence that demand contraction lies at the heart of the Covid-19- induced economic crisis. The State needs to open its purse strings in order to kick-start the economy. But it also needs to urgently change the rules of the game. It is the Indian State’s stubborn refusal to respond generously and effectively to the crisis it confronts that remains the biggest hurdle.
Yamini Aiyar is president and chief executive, Centre for Policy Research
The views expressed are personal