$1 bn from World Bank to protect Indian poor from COVID-19

15 May '20

3 min read

Pic: Shutterstock

The World Bank yesterday approved a $1-billion Accelerating India’s COVID-19 Social Protection Response Programme to support India’s efforts at providing social assistance to the poor and vulnerable households severely affected 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 2020 (ending June 30) and a $250 million second tranche that will be made available for fiscal 2021, which begins on July 1, according to a World Bank press release.

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 and food benefits, using a core set of pre-existing national platforms and programs 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.

Social protection is a critical investment since half of India’s population earns less than $3 a day and are precariously close to the poverty line. 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.

Over 9 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 an 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 lock downs 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 Junaid Ahmad, World Bank country director in 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 and $200 million 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 will be made available after June 30 and would be on standard IBRD terms. The programme will be implemented by the Indian ministry of finance.

The World Bank Group is rolling out a $14 billion fast-track package to strengthen the COVID-19 response in developing countries and shorten the time to recovery. The immediate response includes financing, policy advice and technical assistance to help countries cope with the health and economic impacts of the pandemic.

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