World Bank Allocated $1 Billion Social Protection Package for India

The World Bank's board of executive directors has approved a one billion dollar social protection response programme to support India's efforts at providing social assistance to the poor and vulnerable households which have been severely impacted by the COVID-19 pandemic.

This takes the total commitment from the Bank towards emergency COVID-19 response in India to two billion dollars. A one billion dollar support was announced last month towards immediate support to India's health sector.

This new support will be funded in two phases -- an immediate allocation of 750 million dollars for the fiscal year 2020 and a 250 million dollar second tranche that will be made available for the fiscal year 2021.

"The first phase of the operation will be implemented countrywide through the Pradhan Mantri Garib Kalyan Yojana (PMGKY)," said World Bank's Country Director for India Junaid Ahmad on Friday.

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); provide robust social protection for essential workers involved in COVID-19 relief efforts; and benefit vulnerable groups, particularly migrants and informal workers, who face high risks of exclusion under the PMGKY.

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.

"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," said Ahmad.

"The funding will underpin support to state governments who will use local administrations, self-help groups and ASHA workers to ensure that safety net is delivered to these citizens," he said.

Over nine 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 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 around the world has required governments to introduce social distancing and lockdowns 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. India with the world's largest lockdown has not been an exception to this trend," said Ahmad.

"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."

The COVID-19 pandemic has also put the spotlight on some of the gaps in the existing social protection systems. This programme will support the government's efforts towards a more consolidated delivery platform -- accessible to both rural and urban populations across state boundaries, said Ahmad.

"The platform draws on the country's existing architecture of safety nets -- the PDS, the digital and banking infrastructure, and Aadhaar -- while positioning the overall social protection system for the needs of a 21st century India. Importantly, such a system will need to leverage India's federalism enabling and supporting states to respond quickly and effectively in their context."

Of the one billion dollar commitment, 550 million dollars will be financed by a credit from the International Development Association (IDA) -- the World Bank's concessionary lending arm -- and 200 million dollars will be a loan from the International Bank for Reconstruction and Development (IBRD) with a final maturity of 18.5 years including a grace period of five years.

The remaining 250 million dollars will be made available after June 30 and will be on standard IBRD terms. The programme will be implemented by the Ministry of Finance.