A Safety Net, Post Covid

Context: In the post-COVID-19 situation, there is a need to institute schemes to provide a minimum income for the poor and vulnerable groups. 

Issues with Non-Universal Targeted Programs: Schemes like the Congress proposed – Nyuntam Aay Yojana (NYAY), are marred with the problem of identification and give rise to exclusion and inclusion errors.

Suggested Proposals: The following proposals meet the objective of providing minimum basic income to vulnerable sections in both urban and rural areas.

• Cash Transfers: to all women above the age of 20 years.
• Making available a minimum of Rs 4,000 annually to all of them would cost around 0.84% of GDP.
• Expanding Employment: 
• Increasing the number of days in MGNREGA: 

• Currently, MGNREGA is availed of only for 50 days of employment, although the Act guarantees 100 days of employment.
• Increasing the days to 150 in rural areas is suggested.

• A National Employment Guarantee Scheme for urban areas:

• Employment to be provided for both unskilled and semi-skilled workers.

• Together, the total cost would be around 1.58% of GDP.
• Financial Feasibility: A mix of rationalization and consolidation of revenues can help sustain the above schemes.

• Rationalization:

• Number of days availed by the employment guarantee programmes could be lower as it is demand based programme.
• Well off women may voluntarily drop out of the cash transfer scheme or alternatively declaration of monthly income can be sought for eligibility to benefits under it.

• Consolidation:

• Phasing out of some expenditure like tax exemptions and non-merit subsidies and raising additional revenue.

Conclusion: This will help the poor, informal workers, including migrants, significantly reducing poverty.