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Direct cash transfer best way to help poor in Covid crisis. If Modi govt can’t do it, let us

It is disappointing that direct cash transfers are not a major part of Modi govt's economic package. So here's an idea to make this work.

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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.

Also read: Like an MEA to help NRIs in crisis, India needs a system for its internal migrants too

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.”

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.

Also read: Modi govt needs to open the JAM for public contributions. PM Care alone can’t deliver

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.

Also read: Coronavirus lockdown has given us a blank slate. We can write a new world when it lifts

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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  1. 🙏🙏Sir please help me some money amount I’m a poor family person..I have,(1) No job
    (2)..No service..
    (3)No contract..
    (4)No business…
    (5)No account balance avail able.
    .please help in Cash transaction in my account number..39092633448/IFSC SBIN0005738..Tatung Tok…
    Village- pakro
    P.o pijerang
    District East kameng Seppa.
    Arunachal Pradesh..
    Pin code…790102..

  2. I am a widower with 12 year old son and residing in Ahmedabad Gujarat needing financial help .I am suffering with Rheumatoid Arthritis and also have been burnt with the bike silencer on the left leg ,can’t walk properly,I nned the support 🙏 so please help me

  3. Hello Sir
    I am in need of help these days so
    My condition is not good pls help
    Me as I am running in a bad situations
    I have no arrangement of money pls
    Provide some help

  4. I am passing these days with a hardship crisis so
    I need personal loan of some amount pls
    Help me by Modi Sarkar to give me personal Loan without charging any fees , if any option of quick disbursal from the Loan amount , it would be great help for me

  5. Samaskar sir
    Mera naam Dhananjay Kumar
    Mere pass pise nahi hai
    Or naa rahaney ke lie koi safe jagah
    Khaana bhi bahut muskil se mil pata hai
    Din per Din kamjori mahsush hoti hai
    Sir meri madat kijie aap ki ati kirpa hogi
    Ek visvash hai jo din din tot raha hai
    Tel 9212828480

  6. I m a real of poor man I did not have anything I did not have house. I m in Manipur. I here in house bahara.. I find maney and eat food giving house bahara. In now covid 19 is much of poor for.. and I have disease of neck. I have much have neck dark. Please help me

  7. My name is anil job is gone in April month and I don’t have money spend in my house for last 2 months I don’t have money please can you help me my number is 9821183906.

  8. Sir please some money donate me
    Me paisa kamata he suger can juice ka .lockdown se kamnahi horaha paisabi khatam hogaya.lockdown bi 3 months hogaya.labour ka paisa bi nahi milraha is liyeplz some money give me.

  9. This is happening in disbursement of Zakat. Even though the Zakat has its religious hue, it act as a solution to the problems of a section of our society. Giving 2.5 % of the annual income, if it exceeds certain limits, to the poor and needy is a good model of cash transfer. If we can emulate this practice across the borders of caste or creed it will make significant change; especially in a society like India where the ‘other worldy’ expectations also a major deciding factor in spending habits.

  10. Dear sir.
    My name is Qasim masih I’m from Pakistan
    I’m a contractor I have 5 years experience of construction work I want Start a New construction business but I have no money I need funding or USAIAD for my poor business please help me any invester for investment in construction business.
    0920313 Maxwell

  11. for any funds to be given first of all we need to know how many are eligible. You are the one objecting to NRC. let NRC be completed, we shall know how many are Indians who need to be funded. stop you r method of delaying NRC, Protesting Aadhar etc. under a stupid excuse of privacy. let JAM be completed . such transfers shall be done then.

    • We don’t need to know how many are Indian, we need to know how many are HUNGRY – will NRC tell us that?
      I don’t know if this half-baked argument comes from Nagpur or from your brain, but try to understand what you are implying – that a nation should feed only its own – should other countries stop feeding the stranded Indians or NRIs in trouble?

  12. The author probably has not seen the utility of food on demand and otherwise despite number of social organisations has distributed free food to all who so ever comes. We have found many person to collect the raw food for sale later on. In the same way if this scheme, which I could understand, will help only corruption at large level and only those persons who are in need of money will be deprived off. It is not possible in India as on date.
    Yes, I do agree with him that PM should have transferred the funds through DBT and he has done it also. As regards, MGNREGS, the worker should not be paid in cash but only through DBT strictly so that the Dalal may not intervene in the matter. Every such person must have account in one or the other bank. Govt must ensure that all transaction must be done through electronic mode and when there is cash withdrawal more than a certain limit, the transaction tax be imposed irrespective of constitution of firm or individual, HUF partnership, NGO etc. This limit be fixed at the bare minimum for exemption so as to force the people to make transactions through electronic mode only at all level. Even in the rural area, the payment is made and received through electronic system BCs, Payment banks etc.

  13. I would really like to see this happen. Problem is most of us end up helping poor that we know vs poor that are probably really isolated. But this is because we need to build some trust that the new platform is legitimately distributing money. Everything you state relies on that.

    Can we integrate this with something like online crowdfunding platforms like Rang De or Milaap? Because that gives some legitimacy. We must ensure that any transfer sum requested is one-off and can’t be repeatedly used. But we still need to know how there is a proper channel created. Nitin, can I urge you to contact some of these crowdsourcing platforms and see if this can be developed? Because they may have some aspect of it sorted out already. What we need is a good verification system and trust building campaign.

    • I would also want to add that lets try to not politicize this by talking about govt failure. Lets start this initiative as a purely good will and charitable action. Lets do something like one person with means supports one person without. The moment we raise this under the banner of govt didn’t do but people did, a big proportion of population will be alienated.

  14. Your comment: ‘ To my knowledge, no state government has introduced cash transfers either. ‘

    Please look into Karnataka with cash transfer for
    1- auto cab drivers,
    2- barbers, dhobis,
    3- fruits, flowers growing farmers .
    And others too ..
    The government has announced the process it will take some time, which in my ‘knowledge no other state has done’.

    I know my comment may not reach you, if reached you won’t publish or post this news.

    You are a publisher and comments such as ‘ To my knowledge, no state government has introduced cash transfers either’ is not a right one in my opinion.

    I am not particularly interested in any politics I was just reading this post , as I am a regular viewer of your media.

    I was just concerned that as my state was doing all these things, which you not informed about being a journalist ‘may be I don’t know’.

    I don’t think I will be hearing back from you, please encourage the government which are doing some help for people. Like me others when they read your post might feel happy about it.

    I don’t think any other may have typed such a long comment.😅

  15. Hey Liberals – why dont you and your ilk like JNU-Khan Market Naxals donate YOUR money instead of asking the Govt to donate OUR money for you fantasy projects ??

    Ever heard of GofundMe ??

    Direct Cash Transfer is nothing more than a Financial stimulus for Liquor Shops, Jio and Toddy manufacturers!

    Most of these migrants crisis is because of Dangerous Labor laws that prevent these people from stable employment with benefits designed by Communists to punish industry and corporates. But apparently Modi should spend the money he doesn’t have to put cash into the hands of migrants because it makes people like Mr Pai feel good about their own luxurious lifestyle and political philosophy that has bred this underclass !

  16. An excellent idea for an unprecedented emergency, that unfortunately coincided with unprecedented government apathy and cruelty.
    Many grassroots organizations and ordinary citizens are already doing this job – providing meals and more to millions.
    Let us broaden this by all means, but we must not forget to ask the government to do its tasks too. What is the point of having a government that collects taxes (and asks for donation to the emergency PMCare fund) if finally citizens depend on the charity or each other? Where is our tax money going?

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