Economy

As Poverty Spikes Due to Lockdown, A Separate Package for Urban Distress is Urgently Needed

Income-earning opportunities for a vast majority of India's urban poor, over the next few months, look bleak. What can be done for them?

Over the last two months, India has watched in horror as lakhs of migrant workers and their families – some on cycles, many more on foot – walked back hundreds of kilometres from their place of work to their towns and villages.

A recent rapid sample survey by the Stranded Workers Action Network (SWAN) – which surveyed 11,000 migrant workers – indicates that 86% of them had not been paid by their employers during the lockdown.

Now, that the people stuck across India have been allowed by the Centre  to return home by special trains, lakhs of people will go back over the next few days. Their happiness at rejoining the family will however be short lived as  economic distress will catch up within weeks, if not days.

Indeed, it appears that COVID-19 has temporarily destroyed the gains of reducing poverty since 2005. The number of poor decreased from 40.7 crore in 2005 to 35.5 crore in 2009-10 and then to 26.9 crore by 2011-12. Based on NSSO data of 2011-12, Shweta Saini of ICRIER has estimated that just a 25% reduction in annual income may cause the number of poor to increase from about 21.9% to 46.3% of the population.

In all probability, most people employed in the unorganised and informal sector will lose much more than 25% of their income. It is clear that India should prepare itself for a dramatic temporary increase in poverty. It will not be confined to only the rural areas. Large numbers of people working and living in the towns and cities would not have an option to return to their villages.

This includes artisans, mechanics, technicians and other workers, most of them self-employed in the service sector or working in small, unregistered businesses. They may be without any documents of income or proof of work.

Also read: As Millions Fear Starvation, Govt to Convert ‘Surplus’ Rice Into Ethanol for Sanitiser

While 81 crore people are entitled to get food grains under the National Food Security Act (NFSA), there are many who now deserve to get food grains at NFSA rates.

This number of 81 crore would also include many migrants who may have ration cards in places from where they have migrated. The inter-state portability of ration cards is already available in Andhra Pradesh, Goa, Gujarat, Haryana, Jharkhand, Kerala, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Telangana and Tripura.

In other states, as an emergency measure, those with cards of another place or state should also be provided food grains for the next three months at NFSA rates, by noting down their Aadhaar numbers.

There are another about 10 crore people who became eligible by 2020, to get ration cards under NFSA but they have not been given the same. Since their identification is not easy during COVID-19 epidemic, it is suggested that food grains may be issued for three months to anyone presenting himself at a ration shop, by just noting down the name and Aadhar number. In order to prevent any possibility of leakage or misuse of highly subsidised food-grains, they could be charged 50% of MSP, that is Rs 9.60 per kg for wheat and Rs 13.70 per kg for rice. This will result in self targeting. The government can offer it for three months, i.e. till July 2020.

In the next one month, the NITI Aayog should determine the number of additional households which need to be covered under NFSA. For this, they have to arrive at much delayed numbers of the poor. The states can then select the beneficiaries by applying the same set of deprivation criteria which were used when NFSA was launched. It should not be difficult for the states to identify such deserving households within the next three months.

However, the main challenge is how to identify the households who deserve cash and livelihood support to survive.

Also read: Could We Have Done More to Stop the Spread of the Coronavirus?

Under PMGKY, 29.1 crore households were eligible to receive money through direct benefit transfer. This includes about 8.7 crore landowners who have received the first instalment of Rs 2,000 under PM Kisan. In June 2019, the landholders owning more than 2 hectares of land were also included under PM Kisan. According to a Nabard survey, the average income of a farmer owning more than 2 hectares in Punjab was Rs 50,000 per month in 2015-16. Clearly, this was poor targeting of scarce resources.

In addition, under PMGKY, 20.40 crore women Jan Dhan account holders are to get Rs 500 per month till June. There would be many undeserving households in this category also as there was no income criteria for opening Jan Dhan accounts.

The more deserving category of people includes about 3 crore widows above 60 years and Divyang. The government has already announced that they will get an additional Rs 1,000 during April to June under PMGKY. This is grossly inadequate.

India’s social security schemes, under National Social Assistance Programme provide just a pittance: Rs 200 per month for persons of above 60 years and Rs 300 per month each for widows and disabled of age 40-79 years. For those above 80 years, the pension amount is raised to Rs 500 per month. These rates have not been revised since 2006-07. The identification of these persons is quite robust and they deserve to receive Rs 1000 per month through direct benefit transfer, from the Central government.

In the rural areas, agriculture operations for kharif 2020 and works under MGNREGA will provide income to those who are willing to work.  In view of possible surge in demand, the ceiling of 100 days under MGNREGA should immediately be raised by the Centre in 115 aspirational districts, already identified as very poor. For other districts, a decision could be taken at the end of May 2020.

Also read: COVID-19 Lockdown: In April, MGNREGA Work Crashed to Lowest in 7 Years

Since Aadhaar number is captured for PDS, MGNREGA and Jan Dhan accounts, an exercise to link these data bases may be useful for cash transfer through DBT in rural areas.

Unlike rural areas, there is no agricultural activity or employment programme in urban areas. A vast majority of urban poor may not earn any income for months. Their identification for DBT is also not easy.  The Socio-Economic Caste Census (Urban) can provide a window of opportunity. This database has been largely used for the urban beneficiaries of Ayushman Bharat, drawn from 2.33 crore households engaged in 13 most vulnerable and low paid occupational groups.

Therefore, these households could be considered a good proxy for the most deprived urban poor. As an interim measure, they may be provided a cash transfer of Rs 1000 per month per household for three months, i.e. till July 2020, to enable them to survive loss of income.

The pandemic has sharply spiked urban unemployment in India from 8% in March to nearly 25% in April as per the latest CMIE report. As a longer-term intervention, we recommend rolling out an Urban Employment Guarantee scheme, at least in selected urban local bodies.

Finally, early resumption of economic activity is the only solution to address the all-round distress caused by COVID-19. It should be remembered that once the kharif sowing operations are over, rural India will also not be in a position to employ an influx of millions of migrants who had left villages for cities in search of livelihood. When the threat of COVID-19 has subsided, conditions must be created to enable them to return to work.

Siraj Hussain is Visiting Senior Fellow ICRIER and is a former Union Agriculture Secretary. Jugal Mohapatra retired as Union Secretary, Rural Development.