During as deep and as unprecedented a crisis as the coronavirus pandemic, the best way to help the largest number of people is to put money in their pockets. In most cases, cash allows people to purchase what they want: whether it is food grain, oil, medicine, a recharge on the mobile phone or a railway ticket home. Cash in hand also gives vulnerable people a little more confidence to deal with the many uncertainties of life during a crisis. Yes, in a country as large as India, there will be instances where cash won’t help, but for hundreds of millions of people, money is the single-most important helpful thing today.
And thanks to Unified Payments Interface (UPI) and Jan Dhan, Aadhaar and Mobile (JAM), India today can process direct cash transfers to hundreds of millions quickly and efficiently.
So, it is disappointing that direct cash transfers do not form a significant part of the Narendra Modi government’s economic package announced last week. Towards the end of March, it re-assigned around Rs 62,000 crore for transfers to women Jan Dhan account holders, farmers and construction workers, but did not widen cash transfers after that. It is unclear if the PM CARES Fund will be used for the purpose either.
Direct cash transfer was the only way
To my knowledge, no state government has introduced cash transfers either. MGNREGS, or National Rural Employment Guarantee Scheme, is often talked about as if it were a direct cash transfer programme. It is not. It pays wages in return for work. It is at best an imperfect rural social security programme, which is now being force-fitted for emergency relief because the administrative machinery for it exists in the country.
By definition, MGNREGS does nothing for vulnerable people in non-rural areas, which constitute about 40 per cent of India’s population. Crores of people in towns and cities — including the urban poor, migrant workers and self-employed — find themselves in distress due to loss of income. I do not think the fortunate among us can imagine what it is like to go two months without income, with no end in sight to the lean days.
Cash transfers were perhaps the only way to help the needy quickly. Indeed, the Modi government needn’t even have financed all the cash transfers itself. Early in the crisis, I recommended that the government “enable for all components of society to directly help the needy. The Modi government should roll out a citizen-to-citizen transfer scheme that allows individuals, charities and companies to put money directly into the beneficiaries’ bank accounts.”
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Not only would such person-to-person direct cash transfers be 300 per cent as efficient as government-administered funds, they would also relieve the government of the fiscal burden of having to finance say 3 per cent of GDP in emergency relief.
It can be done even now. The Modi government can still set up an anonymised common national database of the needy and offer tax incentives to individuals, firms and NGOs that donate money through such a programme. It is possible to enroll beneficiaries as easily as with a missed call. The Modi government has the historic opportunity to use person-to-person direct cash transfers to create the world’s biggest “social” social security programme. If it wishes to.
No need to depend on govt
But this can be done even without the government. I’m sharing an idea here in the hope that some of us will be able to make this work within our zones of influence. We can perhaps do this in our neighbourhood, city or state, with or without the support of our governments.
The basic concept is simple. A person seeks help, giving their phone number, basic demographic information and the phone number of at least one reference person. This information is captured in a database. The reference person is then asked to confirm that they know the person and that the help being sought is genuine. If yes, this person is put on the list of help-seekers. Donors can view simple anonymised profiles of the help seekers and can give to any specific person on the list, or to a category of help seekers based on demographic indicators. Such a system can allow a donor to give, for instance, “Rs 2,000 to 10 random persons who have not yet received any transfers.”
Person-to-person direct cash transfers can be extended to make money available to those who do not have mobile phones, through grassroots NGO partners.
It’s not difficult to build a mobile app to make this happen. Anyone can do this, but if it’s done under the aegis of a qualified non-profit organisation, donors can get some tax benefits.
Evolve a system for staggered help
Of course, the ideal scenario is for the Modi government to implement a national system of direct cash transfers. But we need neither depend on it nor wait for it if we wish to help. Some of my friends have been giving envelopes of cash to needy people in their neighbourhood for the past several weeks. Others are distributing food packets to the needy. Still others are using Twitter hashtags to direct cash transfers to farmers. It is just as well that different people are using different methods to help the people they want to.
Moving ahead, for reasons of scale, sustainability and impact, many of these highly commendable ad hoc initiatives must evolve into a more systematic form. Direct cash transfers are the best option for that.
The author is the director of the Takshashila Institution, an independent centre for research and education in public policy. Views are personal.
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