Statement for a National Relief and Recovery Package : If Not Now, When ?

The impact of the two COVID waves and attendant lockdowns on Indian households and workers cannot be overstated. Even before the devastating second wave, several sources suggest that millions of households became poor, reversing hard-fought gains in poverty reduction. More than half of the informal workforce lost work and incomes, and over two-thirds experienced increased hunger (see Annexure 2 in this note). Poorer households have borne the brunt of the impact and inequality has, without doubt, worsened and deepened. The ongoing second wave and localised restrictions have not only exacerbated the shocks of 2020 for the urban poor and migrant workers but have also made rural households and non-poor households newly and deeply vulnerable. Women, children, and socially disadvantaged groups, in particular, are at a higher risk of falling behind over the longer term.  Unless bold steps are taken, these effects may be long-lasting.

Even prior to the pandemic, the Indian economy had experienced several quarters of economic slowdown resulting in high unemployment and wage stagnation. The income shock of the pandemic has further depressed aggregate demand. Beyond the necessary focus on vaccination and health systems, therefore, a rapid macroeconomic recovery requires an urgent response in the form of a National Relief and Recovery Package to: (a) protect life, (b) partially compensate for lost livelihoods and income, and (c) boost demand in the economy for faster overall recovery. Without the direct support of such a Package, simply unlocking the economy will not lead to a balanced recovery. Advanced and developing economies across the world are investing in similar state-led recovery programmes that seek to boost household income and spending, recognizing the need for large scale relief and recovery interventions into the economy. India must do the same.

This statement focuses on three minimum and necessary elements of this package: food, income, and work. The near-universal impact of the second wave means that we focus on a larger set of vulnerable households beyond, for e.g., just those included under the National Food Security Act (NFSA). The Package must thus cover 33cr households in all which is about 80% of all rural households and 70% of urban households in the country (see Annexure 1 in this note). Building on and expanding the 2020 national relief package, we detail key components in the table below while also suggesting additional measures on loans and credit in Annexure 1.

Clear delivery mechanisms exist with precedence for recommendations on Food and Work, with known and accepted fiscal allocations. For Income, the proposed crisis cash transfer must leverage existing direct benefit transfer systems (NREGA, PM-KISAN, PMJDY, NSAP) with new decentralized systems of direct distribution from ration shops, post offices, panchayats and other local institutions. We anticipate, as detailed in Annexure 1 in this note, that the proposed income transfer will cost the Government of India an additional Rs 5.5 lakh crore, or 2.45% of the projected 2021-22 GDP. The Centre must lead in this package, with minimal cost-sharing with states who focus on delivery and use their own funds to expand the reach of the package, particularly in urban areas.

It is essential that the Government of India recognize the need for directed, equitable and dignified economic recovery for India’s workers and citizens. We urge it to act urgently, following its constitutional obligations as well as global best practice. If not now when?

Endorsements:

1.     Aajeevika Bureau

2.     All India Central Council of Trade Unions (AICCTU)

3.     Andhra Pradesh Domestic Workers Federation

4.     Andhra Pradesh Vyavsaya Vruthidarula Union (APVVU)

5.     Asangathit Kaamgaar Adhikar Manch

6.     Assam Mazdoor Union

7.     Association of Rural Education and Development Service (AREDS)

8.     Azim Premji Philanthropic Initiatives

9.     Bandhua Mukti Morcha

10.  Bhartiya Kamgaar Sena

11.  Centre for Amenities, Rehabilitation and Education (CARE)

12.  Centre for Financial Accountability

13.  Centre for Labor Research and Action

14.  Dagadkhan mazdoor kalyan parishad

15.  Dakshinbanga Matsyajibi Forum (DMF)

16.  Dalit Bahujan Resource Centre

17.  Dalit Media Watch

18.  Delhi Shramik Sangathan

19.  FIRA- Federation of Indian Rationalist Association

20.  Ghar Bachao Ghar Banao Andolan

21.  Gram Vaani

22.  Grameena Koolikaarmikara Sanghatane (GRAKOOS)

23.  Habitat and Livelihood Welfare Association

24.  Hamal Panchayat

25.  HASIRUDALA

26.  Hawkers Joint Action Committee

27.  Indian Federation of App based Transport workers (IFAT)

28.  Indian Labour Union (ILU)

29.  International Federation of Trade Unions (IFTU)

30.  Jan Chetna Sansthan

31.  Jan Jagriti Shakti Sangathan

32.  JSA-MUMBAI

33.  Kaamgaar Ekta Union

34.  Maharashtra Kashtakari Sangharsh Mahasangh

35.  MANS- Maha ANiS- Maharashtra Andhashraddha Nirmulan Samity.

36.  Mazdoor Kisan Shakti Sangathan

37.  Meghalaya & Greater Shillong Progressive Hawkers & Street Vendors Association

38.  Nari Atyachar Virodhi Manch (Forum Against Oppression of Women), Mumbai

39.  National Alliance of People’s Movements (NAPM)

40.  National Campaign Committee on Central legislation of construction workers

41.  National Centre for Advocacy Studies

42.  National Centre for Labour

43.  National Confederation of Dalit and Adivasi Organisations (NACDAOR)

44.  National Fish Workers Forum

45.  National Hawkers Federation

46.  National Platform for Small Scale Fish Workers (NPSSFW)

47.  National Workers Movement

48.  PAIGAM Network (People’s Association in Grassroots Action and Movements) and Akriti Bhatia

49.  Partnering Hope into Action Foundation (PHIA)

50.  Prayas Centre for Labor Research and Action

51.  RAIOT Collective, Meghalaya

52.  Rajasthan Gharelu Mahila Kaamgaar Union

53.  Recyclers association

54.  Right to Food Campaign India

55.  Rural Uplift Centre

56.  Rythu Swarajya Vedika

57.  Sarvahara Jan Andolan

58.  Shramik Adhikar Manch

59.  Social Accountability Forum for Action and Research (SAFAR)

60.  Telangana Domestic workers union

61.  Thma U Rangli-Juki (TUR)

62.  Tirupur Peoples Forum

63.  Trade Union Centre of India (TUCI)

64.  United Nurses Association

65.  Vaan Muhill

66.  Workers Power of Meghalaya, Meghalaya

67.  Youth for Unity and Voluntary Action (YUVA)

68. YUGANTAR

Annexure 1: Background Note and Details Entitlements and Coverage

There are 42cr households in India (24.4cr rural and 17.6crore urban).1 How many must a crisis response cover? We detail coverage by type of entitlement. Overlaps in entitlement will aid an integrated response for each household and cover the most vulnerable.

In addition the following measures should be enacted:

Work:

• Initiate immediate urban employment initiatives through public work programmes

Credit:

• Waiver of interest payments for one year on existing loans for workers in the informal economy
• Extension of moratorium on loan repayments for loans taken by workers in the informal economy from 2020-2022

Mechanisms of Proposed Income Transfer

To reach these households, there should be multiple channels of distribution including bank transfers as well as modes of direct distribution.

1 The population census households and amenities table from the 2011 census shows that there were 33 crore households (22 cr rural and 11 cr urban, up from 25 crores in 2001 with a 24% rural growth rate and 54% urban growth rate). Assuming a 60% urban and 20% rural household growth rate, we have estimated India to have 42cr households.

2 Under NFSA, there are 23.61 cr ration cards but these are based on 2011 census. Roughly 10 cr eligible individuals are not covered under NFSA. Considering a household size of 4, the NFSA coverage must at least be 26 cr households.

3 NFSA covers 75% of rural households and 60% of urban households. For the additional 7cr households, we assume a concentration in urban areas. Therefore, the total 33cr households cover about 80% of all rural households, and 70% of all urban households, including migrant households.

4 There is precedence for this during drought and the pandemic is a national disaster.

• The Central government should undertake direct transfers to active NREGA job-card holders (~9cr households; total job card holders are 15cr households), and NSAP households (~3.4crore households) and the overlap between them. NREGA and NSAP households are already bank linked and amenable to direct transfers.
• For NFSA households without bank information linked to databases, flexible modes of direct distribution should be used including new registrations as well as distribution at post offices, ration shops, panchayats, and other local public institutions as mediums
• State governments must expand the reach to households beyond those in NFSA using existing schemes in particular for the urban poor and migrant workers. These can be occupation based, including and beyond existing state schemes and lists. Here also, transfers should be through a mix of direct bank transfers and flexible modes of direct distribution.

Resource mechanism

• PM-KISAN and the National Social Assistance Programme (NSAP) are two existing household cash transfer programmes. Annual budget of PM-KISAN is Rs 75,000 cr and annual budget of NSAP is Rs 9,200 crore. For six months this adds up to Rs 42,100 cr. The crisis cash transfer should be a top-up over these existing transfers.
• A transfer of Rs 3,000 per month (which is less than one-third of the national minimum wage threshold of Rs 375 per day) for 6 months to 33 cr households amounts to a total spending of Rs. 5.94 lakh crore. Subtracting the PM-KISAN and NSAP budget for the next six months from this implies additional spending of Rs 5.51 lakh crore which is 2.45% of the 2021-22 GDP.5
• The resource responsibility for the above proposals should be taken up by the Centre.
• However, for income transfer a 90:10 and 80:20 formula can be devised for states above and below the median per capita income level.
• Several states have already initiated specific schemes. These should be expanded.

5 Table 2 from the CSO Press Release gives the nominal GDP as Rs 197 lakh crores. Assuming a projected real growth rate of 9% and an inflation of 5% the ‘21-22 GDP is estimated at Rs 225 lakh crores.

Annexure 2: Supporting Data for Relief Measures

Here we present some supporting data concerning the massive blow to the informal sector and other vulnerable populations. The data compares the pre-pandemic situation to the situation till November-December, 2020 on aspects of hunger, loss of livelihoods and income. As the second wave has ravaged the country further, the precarity and vulnerability would have only increased further from what is presented here.

Key Findings from the State of Working India Report, Centre for Sustainable Employment, Azim Premji University

1. About 12 crore people lost jobs during the nationwide April-May 2020 lockdown. By the end of 2020, about 1.5 crore workers remained out of work.
2. Women and younger workers were disproportionately affected, and many could not return to work even by the end of the year
   1. During the lockdown and in the months after, 61% of working men remained employed and 7% lost employment and did not return to work. For women, only 19% remained employed and 47% suffered a permanent job loss during the lockdown, not returning to work even by the end of 2020
   1. Younger workers were much more impacted, experiencing higher job losses, of a more permanent nature. 33% of workers in the 15-24 years age group failed to recover employment even by Dec 2020. This number was only 6% in the 25-44 years group.
   1. Poorer households were worst affected, and poverty and inequality has increased
      1. Over the entire eight-month period (Mar, 2020 to Oct, 2020), an average household in the bottom 10% lost ₹15,700, or just over two months’ income.
      1. Considering the modest national minimum wage threshold of ₹375 per day (the Anoop Satpathy Committee), 23 crore individuals have been pushed below these minimal earnings.
   1. Large increase in informal employment: Nearly half of formal salaried workers moved into informal work, either as self-employed (30%), casual wage (10%) or informal salaried (9%) workers, between late 2019 and late 2020

Key Tables from a Review Paper by Jean Dreze and Anmol Somanchi (2021)

Table 1: Average Income Reduction from Pre-lockdown Levels

a Non-agricultural households.

Note: The last column refers to the average income reduction among sample households. For details of the respective samples, see Appendix. The first row is based on CMIE data (Bertrand et al. 2020).

Table 2: Food Insecurity

a Survey period, in cases (flagged with an asterisk) where the reference period for these indicators is not explicit.

b Sample focuses on particularly vulnerable groups.

c Pertains to cereal (rice and wheat) consumption.

Note: The last column indicates the proportion of affected households (or individuals, in the case of ActionAid) in the sample.