Amartya Sen, Raghuram
Rajan, Abhijit Banerjee write:
A long haul, spend wisely, but
don’t skimp on the truly needy
We in India worry a lot about the possible mis-steps that can happen in the implementation of
large-scale transfers; the money (or the food ) may end up in the wrong hands, some
intermediary may get rich at the expense of the taxpayer. In some ways, this is a welcome
shift from the see-no-evil optimism that gave us government-run hotels and “luxury” river
cruises. But in times like these, amidst the pandemic and the global economic crisis, with the
nation in lockdown and with lives and livelihoods at stake, it is the wrong set of concerns.
As it becomes clear that the lockdown will go on for quite a while, in a total or a more
localized version, the biggest worry right now, by far, is that a huge number of people will
be pushed into dire poverty or even starvation by the combination of the loss of their
livelihoods and interruptions in the standard delivery mechanisms. That is a tragedy in itself
and, moreover, opens up the risk that we see large-scale defiance of lockdown orders —
starving people, after all, have little to lose. We need to do what it takes to reassure people
that the society does care and that their minimum well-being should be secure.
We have the resources to do this; the stocks of food at the Food Corporation of India stood at
77 million tons in March 2020 — higher than ever at that time of the year, and more than
three times the “buffer stock norms”. This is likely to grow over the next weeks as the Rabi
crop comes in. The government, recognizing the disruptions to the agricultural markets from
the lockdown, is more than usually active in buying the stocks that the farmers need to get rid
of. Giving away some of the existing stock, at a time of national emergency, makes perfect
sense; any sensible public accounting system should not portray it as inordinately costly.
Indeed the government already has shown a willingness to use the stocks — it has offered a
supplementary PDS provision of 5 kg/person/month for the coming three months. However,
it is quite likely that three months will not be enough, since even if the lockdown ends soon,
the process of reopening the economy will take time. More importantly, a substantial fraction
of the poor are excluded from the PDS rolls, for one reason or another (such as identification
barriers to get a ration card that turn out to be hard to overcome), and this supplementary
provision only applies to those who are already on it. For example, even in the small state of
Jharkhand, there are, we are told, 7 lakh pending applications for ration cards. There is also
evidence that there are a lot of bona fide applications (for example of old-age pensioners)
held up in the verification process, partly because the responsible local authorities try to
avoid letting anybody in by mistake to avoid any appearance of malfeasance.
Such punctiliousness has its merits, but not in the middle of a crisis. The correct response is to issue
temporary ration cards — perhaps for six months — with minimal checks to everyone who wants
one and is willing to stand in line to collect their card and their monthly allocations. The cost of
missing many of those who are in dire need vastly exceeds the social cost of letting in some who
could perhaps do without it.
This principle, once recognized, has a number of important implications. First, the
government should use every means at its disposal to make sure that no one is starving. This
means expanding the PDS, as discussed, but it also means setting up public canteens for
migrants and others who are away from home, sending the equivalent of the school meal to
the homes of the children who are now stuck at home (as some states are already doing), and
making use of reputed local NGOs that often have a reach among the most marginalized that
exceeds that of the government.
Second, starvation is just one of the worries; the unexpected loss of income and savings can
have serious consequences, even if the meals are secured for now: farmers need money to
buy seeds and fertilizer for the next planting season; shopkeepers need to decide how they
will fill their shelves again; many others have to worry how they would repay the loan that is
already due. There is no reason why, as a society, we should ignore these concerns.
The government has partly recognized this in the cash transfers it has promised to certain
groups; but the amounts are both small and narrowly targeted. Why only farmers and not
landless labourers, especially since MGNREGA is hobbled by the lockdown? And help needs
to be extended to the urban poor. Once again, the priority should be to err on the side of being
inclusive. P Chidambaram’s idea of using the MGNREGA rolls from 2019, plus those
covered by Jan Arogya and Ujjwala to identify the poor households and to send them 5000
rupees each to their Jan Dhan accounts, seems like a good first step. But we must recognize
that none of these lists are perfect and moreover the recent work of Rohini Pande, Karthik
Muralidharan and others have exposed the many gaps in the JAM infrastructure in terms of
reaching the very poor. Therefore, as a part of the commitment to not miss the needy, there
has to be funding available that state and local governments can use to find effective ways to
reach those who suffer from extreme deprivation.
If there was ever a challenge that requires brave and imaginative action, this has to be it. We
need to spend wisely given the enormous likely demand for fiscal resources in the coming
months, but skimping on helping the truly needy is the surest way to lose the plot.
— (Sen, a Nobel laureate in economics, is professor of economics and philosophy at Harvard
University; Rajan, former RBI Governor, is professor of finance at University of Chicago’s
Booth School; Banerjee, Nobel laureate in economics, is professor at Massachusetts Institute
of Technology)