Will direct multilateral aid to disaster-hit states become the new normal?

While the Centre has always been leery of a direct outreach to states by global agencies, there are indications that this mindset is about to change

The morning after cyclone Amphan wreaked havoc on West Bengal coast line, the challenge was not only for those who had lost their homes, but also for the government about which schemes to use to reach them. 

Yet, there are almost 1,200 schemes run by the states and the Centre to provide various types of assistance to the poor, including cash. Essentially, in order to make these schemes reach all the poor can there be a portable social security network that is pan-national? The World Bank and the finance ministry are trying to come up with an answer that creates a new template for multilateral institutions to directly support the states and also answers cynics about the effectiveness of such interventions.  

“Is it possible to develop a system of cash support that gets activated whenever there is a large natural disaster,” asks Shrayana Bhattacharya, economist with the World Bank's Social Protection and Labour unit for South Asia. Bhattacharya is part of the team steering this programme from the Bank. The money committed to the project is not much, at $1 billion. The changes being attempted are however significant. The first is in terms of centre—state relations, vis-a-vis the Bank. 

Once again, state level: 

The central government has always been leery of any multilateral institution getting to work with state governments, directly. During the UPA government, for instance, the Bank reworked its Country Assistance Strategy to move away from “focus states” to lending for “cross cutting reforms” across states. It continued under the NDA' s first term too. 

Has that begun to change? World Bank sources feel that the Country Partnership Framework signed in 2018 with India has given it more freedom to reach the states. “The  Bank is increasingly engaging at the sub-national level with the blessings of the central government,” said an informed source. It is also essential, else the states will not cooperate to address the weakness of the specific social sector schemes.

Sudip Mozumdar, lead external affairs advisor at the Bank says, “The project will cover central government’s support to states—allowing them flexibility in the delivery of safety nets.” He adds the CFP has room for encouragement to the Bank to “engage in support to states to plan and implement strategic development based on their priorities”. 

It is understood that the Bank was asked to come into the programme very rapidly (“Accelerating India’s Covid-19 Social Protection Response Program” was signed with the finance ministry in May this year), as the scale of the misery from the pandemic began to unfold nationwide. It will now be necessary for the Bank to use the offered flexibility to create state level responses because while almost all schemes have migrated to the direct benefit transfer model, the still persisting level of exclusions especially at the level of urban poor, has bred cynicism about their effectiveness. 

This is the next challenge. As Shubhashis Gangopadhyay, Founder and Research Director of the India Development Foundation says, “There is nothing to complain about the effort, that is the best I can say. Converting all the schemes into DBT at the state level has been tried earlier too.” Till the end of last year, these schemes had paid out Rs 1.58 trillion, as per finance ministry data.

While some of the larger social protection plans are already reasonably in place like the Pradhan Mantri Garib Kalyan Yojana (PMGKY), the smaller ones have cracks because of which the money meant for the poor, disappear. 

One of those cracks is the fresh registration for each scheme that beneficiaries have to go through. For each of the schemes, ministries and departments hold close to their chest a list of beneficiaries. So do the state governments and none shares their list with each other. So there is no universal list of poor families or individuals available, nation wide. Which means each time an applicant has to use her Aadhaar or other identification to get in the queue. 

The trigger came this summer when the centre tried to reach out to the millions of migrant workers returning to their home states. There are no roll calls for these people, even though most had Aadhaar. The money was ultimately transferred to the MGNREGA scheme since the workers were mostly rural bound. MGNREGA provides a demand led works programme in each district and with the jump in the number of workers expected to ask for such work, keeping funds for the scheme topped up, made sense.  

“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,” says Junaid Ahmed, World Bank Country Director in India, explaining why they got into the programme. The programme sort of marks the re-entry of the Bank into administrative reforms after many years and that too, on such a pan-India scale. Doing it would also mean negotiating through the complex accounting apparatus of especially the states. One option could be to set up a social sector council, like the GST Council which brings political leaders from both levels on the same platform. 

Social Sector Council: 

Dhiraj Nayyar, economist with the Vedanta Group, who has had a long stint with Niti Aayog, thinks it is a possible alternative. “I don’t think states will object, if it is clear that the technology platform can be accessed by both them and the centre”. 

The World Bank will have to negotiate with the states carefully to “enable geographic portability of social protection benefits that can be accessed from anywhere in the country…including for migrants and the urban poor.” This means the same programme may have to hop across state boundaries. The option being considered is to keep the schemes switched on but bring their backend together. The plan is to club the schemes into three buckets: a) preventive like Atal pension yojana, b) protection which helps tide over shock to income to be made good by cash or kind like the PM Garib Kalyan Yojana and c) promotion schemes, like skill development scheme—Deen Dayal Kaushal Vikas Yojana. 

Bringing the back end together is easy now with the Public Financial Management System (PFMS), the web-based online software application the finance ministry has set up as a comprehensive payment, receipt and accounting network. As of November 2019, there were 1,198 schemes that had on-boarded the Direct Benefit Transfer mode. This excludes the big four, MGNREGA, the PM-Kisan, National Health Mission and Food Subsidy schemes. The critical weakness remains that of “mapping of state schemes as per restructured centrally supported schemes has to be completed”, as a finance ministry paper notes. 

Why wasn't the merger done till now? Gangopadhyay says it is surprising that the research for the interventions would need the World Bank to come in, since the problems are well known. Nayyar has an explanation. “Under normal circumstances most things are just added on. A crisis like this gives urgency to the question why people are still falling through the gaps between schemes.” 

Making the back ends speak to each other will mean a beneficiary registered for any of the scheme to receive payments for all schemes. There shall be no need for multiple registration, says Bhattacharya. “It is a problem of engineering and institutional coordination that will allow the states to retain a decentralised approach and yet maximise their delivery,” she adds. 

"This is a useful approach. Many states have given political names to their schemes. It will be impossible to ask them to scrap those. It is better to retain those while making their delivery mechanism common,” said a government source. So a state may have different pension scheme for different demographics, but which can be pushed to be administered by the same administrative department with common names of beneficiaries, the source explained. 

As the World Bank press release notes the changes would “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”. It would move India’s social protection system from a predominantly rural focus to a pan national one “that recognizes the needs of the urban poor”.

Bhattacharya said there are many countries that have successfully experimented with similar delivery mechanisms for such schemes. The World Bank hopes to bring those practices to India. The World Bank’s support of $1 billion will help to leverage the Government of India’s ambitious target of rolling out a comprehensive plan by end of 2021. 

“Our monetary support is quite limited set against the large government programmes. We hope to bring in the knowledge from around the world on how to target those better. The real question is what are the structural shifts that need to be made.”

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