world-bank-aid-to-protect-indias-poorest-from-covid-19-summary

Context: The Government of India and the World Bank today signed a $750 million of $1 billion proposed for Accelerating India’s COVID-19 Social Protection Response Programme to support India’s efforts at providing social assistance to the poor and vulnerable households, severely impacted by the COVID-19 pandemic.

More on the news:

  • This takes the total commitment from the Bank towards emergency COVID-19 response in India to $2 billion. A $1 billion support was announced earlier towards immediate support to India’s health sector.
  • This new support will be funded in two phases – an immediate allocation of $750 million for fiscal year 2020 and a $250 million second tranche that will be made available for fiscal year 2021.

The two phases of Social Protection Response Program: The programme will be implemented by the Ministry of Finance, Government of India. 

  1. The first phase of the operation will be implemented countrywide through the Pradhan Mantri Garib Kalyan Yojana (PMGKY). 
    1. It will immediately help scale-up cash transfers and food benefits, using a core set of pre-existing national platforms and programmes such as the Public Distribution System (PDS) and Direct Benefit Transfers (DBT).
    2. Provide robust social protection for essential workers involved in COVID-19 relief efforts, and 
    3. Benefit vulnerable groups, particularly migrants and informal workers, who face high risks of exclusion under the PMGKY. 
  2. In the second phase, the programme will deepen the social protection package, whereby additional cash and in-kind benefits based on local needs will be extended through state governments and portable social protection delivery systems.

Need for the Social Protection Response Program: 

  • Social protection is a critical investment since half of India’s population earns less than $3 a day and are precariously close to the poverty line. 
  • Over 90 per cent of India’s workforce is employed in the informal sector, without access to significant savings or workplace based social protection benefits such as paid sick leave or social insurance. 
  • Over 9 million migrants, who cross state borders to work each year, are also at greater risk as social assistance programmes in India largely provide benefits to residents within states, without adequate portability of benefits across state boundaries. 
  • Importantly, in an urbanising India cities and towns will need targeted support as India’s largest social protection programmes are focused on rural populations.
  • The response to the COVID-19 pandemic in India has required governments to introduce social distancing and lock downs in unprecedented ways. 
  • These measures, intended to slow down the spread of the virus have, however, impacted economies and jobs - especially in the informal sector. 

In this context, cash transfers and food benefits will help the poor and vulnerable access a ‘safety bridge’ towards a time when the economy will start to revive.

Significance: The programme will create a system that will strengthen the delivery of India’s safety nets program. It will:

  • Help India move from multiple fragmented social protection schemes to an integrated system that is fast and more flexible, acknowledging the diversity of needs across states;
  • Enable geographic portability of social protection benefits that can be accessed from anywhere in the country, ensuring food, social insurance and cash-support for all, including for migrants and the urban poor; and
  • Move India’s social protection system from a predominantly rural focus to a pan national one that recognizes the needs of the urban poor.

 Importantly, such a system will need to leverage India’s federalism enabling and supporting states to respond quickly and effectively in their context.

World Bank Group

  • The World Bank Group is a unique global partnership working for sustainable solutions that reduce poverty and build shared prosperity in developing countries with 189 member countries.
  • It works on issues ranging from climate change, conflict, and food security to education, agriculture, finance, and trade involving different stakeholders like nation-states, the private sector, civil society organizations, regional development banks, think tanks, and other international institutions. 
  • Together, the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) form the World Bank, which provides financing, policy advice, and technical assistance to governments of developing countries.

World Bank Group consists of five development institutions:

  • International Bank for Reconstruction and Development (IBRD) provides loans, credits, and grants.
  • International Development Association (IDA) provides low- or no-interest loans to low-income countries.
  • The International Finance Corporation (IFC) provides investment, advice, and asset management to companies and governments.
  • The Multilateral Guarantee Agency (MIGA) insures lenders and investors against political risk such as war.
  • The International Centre for the Settlement of Investment Disputes (ICSID) settles investment-disputes between investors and countries.