View: The time for a national relief package to prop up Covid-hit working households is now – The Economic Times

Clipped from:

Stimulus packages for the formal economy and enterprises cannot lead to an equitable recovery in a structurally informal economy unless working households are not also directly supported. Individual and national economic recovery demands that working households be supported in an unprecedented time. If not now, then when?

Gautam Bhan

Gautam Bhan

Faculty member, Indian Institute for Human SettlementsRajendran Narayanan

Rajendran Narayanan

Faculty member, Azim Premji University, BengaluruThe last 15 months have brutalised the country in ways hard to grasp. Yet, in a country where 90% of workers have highly inadequate social protection, the impact of a series of economic shocks due to Covid-19 on their lives and well-being must get equal attention. It does not bode well for us as an economy, and a society, that the questions raised by migrant workers walking on highways last year still await answers. The time for a bold, national relief package is now.

Such a package must be rooted in the economic realities of a majority of households. Three data points help assess these realities. In the first, an Azim Premji University report ( noted that in 2020, nearly half of formal salaried workers moved into informal work, with women being more adversely affected.

Hunger Nation
Between March and August, an average Indian household’s income decreased by nearly Rs 25,000. The impact on poorer households was expectedly worse. In the second, Jean Drèze and Anmol Somanchi, in a study distilled in an article that appeared on this page (, show that two-third of surveyed households report increased hunger and reduced consumption. These studies, remember, predate the second wave.

In the third, the Stranded Workers Action Network (SWAN) report ( draws upon relief work with around 8,000 workers between April 21 and May 31, 2021. They find that 92% had not received any payment since lockdowns began and 76% had at most Rs 200 in hand. A staggering 82% had, at most, two days of rations left. What is to be done? Over 70 worker organisations recently endorsed a call by the Working People’s Charter for a national relief and recovery package.

For 82% of all households in the country, the package asks for four core entitlements: free food grains to those within and outside the public distribution system (PDS); a household crisis transfer of Rs 3,000 a month for six months; increased budget and expanded work allocations under MGNREGA; and the initiation of employment-intensive urban public works programmes.

The interlinked demands insist that relief must not just prevent immediate hunger and destitution, but equally compensate for lost income, depleted savings and enable the restoration of life with dignity. As expanded PDS allocations address food insecurity, crisis cash transfers can offer households an opportunity to manage expenses, rent and debt, as well as boost aggregate demand for a balanced macroeconomic recovery.

The precedent of providing 150 days of employment per household a year through MGNREGA already exists for disasters such as droughts. Enhanced workdays and the initiation of labour intensive urban public works programmes will provide a medium-term cushion, as well as an opportunity to create needed local infrastructure assets, especially in urban areas.

Money Order
So, how many, and which, households to reach? Projecting 328 million households in 2021, the proposal argues that the package must begin with households within the National Food Security Act (NFSA). NFSA covers 230 million households — about 67% of total households — based on the 2011 census. Jean Drèze, Reetika Khera and Meghana Mungikar estimate that an additional 100 million individuals, or 25 million households, should be added to update this to 2021 population numbers. Yet, many households — particularly migrant ones — are vulnerable, but not covered by NFSA.

The 2020 Aatmanirbhar scheme for food support to migrant workers outside NFSA reached at least 28 million individuals, with demand from states closer to 80 million individuals. We, therefore, estimate at least an additional 15 million households that should be eligible for assistance. Taken together, the package should target 270 million households — about 82% of total households.

In a welcome move, GoI recently announced that NFSA ration card-holders can avail extra grains till November, 2021. Given that Food Corporation of India (FCI) warehouses have 100 million tonnes of grains (more than three times the buffer stock norms), this allocation must be extended to non-PDS card-holders as well.

Finally, the fifth round of the National Family Health Survey indicates that child malnutrition worsened between 2015 and 2019 in many states. This will have worsened further. Any relief must target specific additional provisions for families with children through anganwadis and midday meals, including providing eggs.

Can this be done? Assuming a projected real growth rate of 9% and inflation of 5%, the 2021-22 GDP estimate is Rs 225 trillion. The proposed household crisis cash transfer of Rs 3,000 a month for six months will cost just 1.97% of estimated GDP. Delivery mechanisms through bank transfers already exist for programmes such as the MGNREGA, PM-KISAN, pensions and other state initiatives. Successful implementation will need these to be supplemented with flexible modes of direct distribution including new registrations, as well as distribution at post offices, ration shops, panchayats and other local public institutions to ensure against wrongful exclusions.

Stimulus packages for the formal economy and enterprises cannot lead to an equitable recovery in a structurally informal economy unless working households are not also directly supported. Individual and national economic recovery demands that working households be supported in an unprecedented time. If not now, then when?

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s