Direct money transfer is the best way to help the poor in the Covid crisis. If the Modi government cannot do it, let us



Migrant worker Tulsi and his family near an entrance to Agra on the Yamuna Highway. | Photo: Suraj Singh Bisht / ThePrint

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Dn a crisis as deep and unprecedented as the coronavirus pandemic, the best way to help the greatest number is to put money in their pockets. In most cases, cash allows people to buy whatever they want: be it food grains, oil, medicine, a top-up on the cell phone, or a train ticket home. at their home. Money in hand also gives vulnerable people a little more confidence to face the many uncertainties of life in times of crisis. Yes, in a country as big as India there will be times when money won’t help, but for hundreds of millions of people money is the most useful thing today.

And thanks to Unified Payments Interface (UPI) and Jan Dhan, Aadhaar and Mobile (JAM), today India can process direct cash transfers to hundreds of millions quickly and efficiently.

It is therefore disappointing that direct cash transfers are not an important part of the Narendra Modi government’s economic program announced last week. Towards the end of March, it reallocated around 62,000 crore rupees for transfers to female Jan Dhan account holders, farmers and construction workers, but did not expand cash transfers thereafter. It is also not known whether the PM CARES fund will be used for this purpose.

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Direct money transfer was the only way

To my knowledge, no state government has introduced cash transfers either. We often talk about the MGNREGS, or National Rural Employment Guarantee Scheme, as if it were a direct cash transfer program. It’s not. He pays a salary in exchange for the work. It is at best an imperfect rural social security program, which is now forcibly adapted for emergency relief because the administrative apparatus for it exists in the country.

By definition, MGNREGS does nothing for vulnerable people in non-rural areas, who constitute around 40 percent of India’s population. Millions of people in cities – including the urban poor, migrant workers and the self-employed – find themselves in distress due to loss of income. I don’t think the lucky ones among us can imagine what it’s like to go two months without an income, with no end in sight for the lean days.

Perhaps cash transfers were the only way to help the needy quickly. This is because the Modi government does not even need to fund all cash transfers itself. At the onset of the crisis, I recommended that the government “allow all sections of society to directly help the needy. The Modi government is expected to roll out a citizen-to-citizen transfer program that allows individuals, charities and businesses to pay money directly into beneficiaries’ bank accounts.

Not only would such direct person-to-person cash transfers be 300 percent as effective as government administered funds, they would also relieve the government of the tax burden of having to fund, say, 3 percent of GDP in emergency relief. .

It can be done even now. The Modi government can still set up a common anonymized national database of the needy and offer tax incentives to individuals, businesses and NGOs who donate money through such a program. It is possible to register beneficiaries as easily as with a missed call. The Modi government has the historic opportunity to use direct person-to-person cash transfers to create the world’s largest social “social” network. security program. If he wishes.

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No need to depend on the government

But it can be done even without the government. I’m sharing an idea here in the hope that some of us can make this work in our areas of influence. Maybe we can do it in our neighborhood, city or state, with or without the support of our governments.

The basic concept is simple. A person asks for help by giving their phone number, basic demographic information, and the phone number of at least one referral person. This information is entered into a database. The reference person is then invited to confirm that he knows the person and that the help sought is real. If so, this person is entered on the list of applicants for assistance. Donors can view simple anonymized profiles of aid seekers and can donate to any specific person on the list, or to a category of aid seekers based on demographic indicators. Such a system can allow a donor to give, for example, “2000 Rs to 10 random people who have not yet received any transfers”.

Direct person-to-person money transfers can be extended to make money available to those who do not have a mobile phone, through grassroots partner NGOs.

It is not difficult to create a mobile app to make it happen. Anyone can do this, but if it’s done under the umbrella of a qualified non-profit organization, donors can enjoy tax benefits.

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Developing a phased assistance system

Of course, the ideal scenario is for the Modi government to set up a national system of direct cash transfers. But we don’t need to depend on it or wait for it if we are to help. Some of my friends have given cash envelopes to needy people in their neighborhood over the past few weeks. Others distribute food packages to the needy. Still others use Twitter hashtags to direct cash transfers to farmers. It’s just as well that different people use different methods to help the people they want.

For reasons of scale, sustainability and impact, many of these highly laudable ad hoc initiatives need to evolve into a more systematic form. Direct cash transfers are the best option for this.

The author is the director of the Takshashila Institution, an independent center for research and education in public policy. Opinions are personal.

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