Double Jan Dhan transfer to poor women, help urban poor: Economist Pronab Sen

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April 14, 2020 8:09 AM

The transfer of around Rs 17,400 crore under the PM-Kisan is being front-loaded. However, most of these interventions will benefit the rural poor more than their urban counterparts, according to analysts.

coronavirus in india, coronavirus impacr on poor, government support to poor, government package for urban poor, Jan Dhan accounts, Pronab Sen economist, government steps during coronavirus pandemicThe economic intervention has to be a judicious mix of fiscal and monetary steps. (Reuters)

The government must at least double the support being transferred to poor women through their Jan Dhan accounts, as the current dole-out to help them fight the pandemic is too small to make a perceptible difference, Pronab Sen, noted economist and former chairman of the National Statistical System, told FE. At the same time, the government must find credible ways to immediately extend handouts to the urban poor, who have been the worst victims of the novel coronavirus pandemic, he said.

However, a precise size of the desired relief package is difficult to predict at this moment, in the absence of an accurate assessment of how badly bruised the supply side of the economy is, he added.

As part of a Rs 1.7-lakh-crore relief package for the poor and the vulnerable, finance minister Nirmala Sitharaman recently announced transfer of Rs 500 a month to 20.4 crore women Jan Dhan account holders for three months. This will cost the government Rs 30,600 crore. The transfer to only women account holders was aimed at helping the intended beneficiaries (poor families) with minimum possible leakage.

The economic intervention has to be a judicious mix of fiscal and monetary steps, including a grand regulatory forbearance to facilitate easier and smoother credit flow to companies, large and small. Also, the timing of the measures to stir demand has to be carefully calibrated, given that demand stimulus will work only after supply chains get back to a semblance of normality. “The immediate priority has to be humanitarian issues. Economic measures can follow, especially at the reconstruction stage,” Sen said.

As part of its relief package, the government has pledged extra rice and wheat to almost two-thirds of population under the PDS for free, which is estimated to cost the exchequer Rs 48,000 crore. The daily wage under the flagship employment guarantee scheme, MGNREGA, has been raised to Rs 202 from Rs 182. The transfer of around Rs 17,400 crore under the PM-Kisan is being front-loaded. However, most of these interventions will benefit the rural poor more than their urban counterparts, according to analysts.

As for helping the vulnerable, Sen said the problem is that there is no credible data registry on the urban poor and most of the social sector programmes, including MGNREGA, through which the government usually intervenes, are typically rural-centric. So, the need of the hour is to devise a credible mechanism through which the government can transfer some money to them.
At the moment, Sen said, the country is witnessing a supply-side problem because of the lockdown, and a demand-based response can’t help much, because the supply-side is not in a position to cope with spurt in demand. But as the lockdown is lifted and the supply chain starts recovering, the demand problem will kick in. So a demand–side response will have to be implemented but the timing of it has to be carefully calibrated.

Earlier this month, Sen had said labour-intensive sectors, including garments, were going to be hit very hard. So getting the production system back to normal in these sectors will be a herculean task. So their recovery will be much slower.

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