$1 Billion From World Bank To Protect India’s Poorest From COVID-19
The World Bank’s Board of Executive Directors today approves a $1 billion Accelerating India’s COVID-19 Social Protection Response Program to support India’s efforts at providing social assistance to the poor & vulnerable households, severely impacted by the COVID-19 pandemic.
This takes the total commitment from the Bank towards emergency COVID-19 response in India to $2 billion.
A $1 billion 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 for fiscal year 2020 & a $250 million second tranche that will be made available for fiscal year 2021.
The first phase of the operation will be implemented countrywide through the Pradhan Mantri Garib Kalyan Yojana (PMGKY).
It will immediately help scale-up cash transfers & food benefits, using a core set of pre-existing national platforms&programs such as the Public Distribution System (PDS) & Direct Benefit Transfers (DBT);
provide robust social protection for essential workers involved in COVID-19 relief efforts; & benefit vulnerable groups, particularly migrants & informal workers, who face high risks of exclusion under the PMGKY.
In the second phase, the program will deepen the social protection package, whereby additional cash& in-kind benefits based on local needs will be extended through state governments & portable social protection delivery systems.
Social protection is a critical investment since half of India’s population earns less than $3 a day & are precariously close to the poverty line.
Over 90 percent of India’s workforce is employed in the informal sector, without access to significant saving.
Over 9 million migrants, who cross state borders to work each year, are also at greater risk.
Importantly, in an urbanizing India cities & towns will need targeted support as India’s largest social protection programs are focused on rural populations.
“The response to the COVID-19 pandemic around the world has required governments to introduce social distancing & lock downs in unprecedented ways.
These measures, intended to slow down the spread of the virus have, however, impacted economies & jobs – especially in the informal sector.
India with the world’s largest lockdown has not been an exception to this trend,” said Junaid Ahmad, World Bank Country Director in India.
“In this context, cash transfers & food benefits will help the poor and vulnerable access a ‘safety bridge’ towards a time when the economy will start to revive.”
The program will create a system that will strengthen the delivery of India’s safety nets program. It will:
- Help India move from 460 plus fragmented social protection schemes to integrated system that is fast & 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 & cash-support for all, including for migrants & the urban poor
“This program will support the Govt’s of India’s efforts towards a more consolidated delivery platform – accessible to both rural & urban populations across state boundaries.
The platform draws on the country’s existing architecture of safety nets – the PDS, the digital & banking infrastructure,& Aadhaar – while positioning the overall social protection system for the needs of a 21st century India.
Of the $1 billion commitment, $550 million will be financed by a credit from the International Development Association (IDA) – the World Bank’s concessionary lending arm & $200 million will be a loan from the International Bank for Reconstruction & Development (IBRD), with a final maturity of 18.5 years including a grace period of 5 years.
The remaining $250 million will be made available after June 30, 2020& would be on standard IBRD terms.
World Bank Group COVID-19 Response:
The World Bank Group is rolling out a $14 billion fast-track package to strengthen the COVID-19 response in developing countries & shorten the time to recovery.
The immediate response includes financing, policy advice & technical assistance to help countries cope with the health & economic impacts of the pandemic.
The IFC is providing $8 billion in financing to help private companies affected by the pandemic & preserve jobs.
IBRD & IDA are making an initial US$6 billion available for the health-response.
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