Coronavirus Outbreak and casual labour: Economist Reetika Khera spells out 26 urgent steps that govt should take

The spread of the coronavirus, and the lockdowns have created economic havoc in the lives of the millions who are part of the informal sector, not just daily wagers, but also workers of the gig economy.

Reetika Khera March 28, 2020 16:04:05 IST
Coronavirus Outbreak and casual labour: Economist Reetika Khera spells out 26 urgent steps that govt should take

The spread of the coronavirus, and the lockdowns have created economic havoc in the lives of the millions who are part of the informal sector, not just daily wagers, but also workers of the gig economy.

According to the Employment-Unemployment Survey, 2015-16, over 80 percent of India’s workforce is employed in the informal sector. One-third are casual labourers.

Within 24 hours of the prime minister’s address on 19 March, crowds at railway and bus stations across these metros began swelling. If they cannot earn, they wanted to get home where they would have at least some food and shelter.

Coronavirus Outbreak and casual labour Economist Reetika Khera spells out 26 urgent steps that govt should take

File image of groups of daily wage labourers walk along an expressway. AP

Distress video messages from groups of young men in little hovels are circulating on WhatsApp, with them appealing to their respective chief ministers from far-off lands to get them home.

The economic situation resulting from the lockdown that is necessary to contain the spread of the virus will affect even those who will escape the  disease. The government did not plan for this beforehand, and the announcement made by the finance minister yesterday missed out on a large range of people in distress.

Here are some suggestions that need to be rolled out as soon as possible.

A.     In urban areas:

The measures announced yesterday left out an important category of vulnerable people: these are people working as migrants in urban areas, whose homes are in rural areas. With the lockdown they are stuck without work, and sometimes even without shelter in urban areas. They will not be covered by any of the measures announced yesterday. Special measures are needed for them.

1.     Shelter for migrants: Use stadium and community halls to accommodate migrant workers temporarily. Provide soap and other hand-washing facilities to reduce risk of community transmission.

2.     No harassment of migrant workers: Strict instructions to police in all states that they cannot harass, beat, extort migrant workers stuck in cities. Action must be taken against such officers to deter such behaviour. Videos of police violence have emerged from different parts of the country on 22 March (see for instance, from Goa and Bhiwandi). Migrant labourers are more vulnerable.

3.     Community kitchens for all: As a large part of the workforce is in the informal sector, many are out of work and either returning home or stuck in cities without employment. Such people need food and shelter.

For food, the Central government can supply free food grain and dal from the Food Corporation of India (FCI). Migrants can use this to run community kitchens (such as Amma Canteens in Tamil Nadu, Indira Canteens in Karnataka, daal-bhaat kendras in Odisha, Chhattisgarh and Jharkhand).

These can be self-managed by the workers, and provide them an opportunity to earn some money.  Target railway stations and bus stations, and in rural areas, block headquarters, for setting up new community kitchens for those who are similarly affected.

To minimise the chances of community transmission, the density of such feeding centres needs to be very high, where entry is either regulated (10 to 15 at a time, or providing food packets for pick-up).

4.     Essential services: Each state should clearly specify what services are included under essential services and the administration must ensure that the providers of these services are not harassed. This needs to be communicated to the state police forces urgently.

5.     Controlled prices for essential goods: As cities lock down, make provision of essentials at controlled prices (not necessarily subsidised) to reduce panic buying and hoarding. Existing (govt and private) networks of shops can be used for this purpose. For example, in Delhi Safal outlets can be used, in Bangalore Hopcoms, and so on.

6.     Control panic: Each district administration needs to set up a daily (area-wise) roster for people to get essential goods and services, to minimise disruption of daily life.

B.     In-kind assistance:

Given the possibility of hoarding, of disruption in the supply chains and the lack of work opportunities, providing in-kind assistance is important at this stage.  If hoarding happens on a large scale, it may lead to price rise, eroding the value of cash.

After the implementation of the National Food Security Act (NFSA), the Public Distribution System (PDS) covers two-thirds of the Indian population. This broad network, which still suffers from exclusion errors, must immediately provide assistance.

It provides priority households 5 kg grain per month for Rs 1 to 3/kg. Antyodaya households get 35 kg per month. There is currently a problem of surplus stocks of food grain with the FCI. The wheat procurement season has already begun in some states, and is about to begin in others.

An earlier recommendation has been included in what was announced yesterday: doubling rations for existing 80 crore ration card holders for an initial period of three months. This must be extended if the emergency situation continues.

1.     Discontinue ABBA: One important modality, which will not cost money, has not yet been announced by the Centre. The Central government must stop Aadhaar-based biometric authentication (ABBA) immediately because of risk of transmission.

It has already discontinued Aadhaar-based attendance for Central government employees on the same grounds. At least two studies show that ABBA achieves nothing in terms of reduced corruption and possibly makes matters worse by increasing transaction costs and exclusion. A few states, including Kerala, Chhattisgarh, Jharkhand and Odisha, have suspended ABBA already. A Central notification is urgently required.

2.     Expand or universalise PDS coverage: Excess stocks can also be used to provide 20 kg per household to “general” cardholders (also called APL in some states) at least at a controlled price (say Rs 10/kg). Better still, the government should universalize the PDS temporarily, give to anyone who shows up at ration shops.

3.     For advance or free distribution: Some states have announced free distribution for 1 to 2 months (Karnataka), advance distribution (Chhattisgarh).

4.     Inclusion of other essentials: The government muster consider provision of soap, dal and oil through the PDS for the coming months.

5.     Home delivery of food for children: Close anganwadis and schools, provide dry rations at home. Try to give eggs and dates in the pack because both of long shelf life and high nutritive value. Following Kerala’s announcement, several states have announced this, other states can emulate the same model.

C.     Cash assistance 

The world over, including in India, cash transfers are being advocated as the first line of action. At first glance, they seem like the easiest and quickest option at first glance, but there are some caveats attached to it:

a.     Deciding the ‘base’ is not trivial: Who gets the cash, and how much? Should it be all  National Rural Employment Guarantee Act (NREGA) workers, should they all get the same (irrespective of how much they worked in the past?

b.     The possibility of hoarding and price rise may erode the value of cash.

c.     The density of bank branches in rural areas is thin, mass cash transfers will create crowding, which in turn will create risk of community transmission.

d.     There is also a largely unacknowledged issue of a mess in the banking system due to the move towards the Aadhaar-Payment Bridge System, that results in rejected payments and diverted payments. Recent data from the health ministry suggested that nearly 10 percent of direct benefit transfer ((DBT)  transfers failed due to this payment bridge. Besides this, payments that appear successful on the DBT portal get misdirected into other people’s accounts.

Yet, there are cash transfers that can (and must) be used. Given the urgency, it would be better to ride on existing cash transfer programmes. This will still leave out some vulnerable populations (the urban poor), but for them other measures are suggested below:

1.     Revert to NEFT payments: For all cash transfer schemes (pension, NREGA wages, PMKY), avoid Aadhaar-Payment Bridge System because of the problem of rejected and failed payments. As mentioned above, the failure rates are high. NEFT is more reliable.

2.     Advance payments: Give three months pension (old age, widows, persons with disabilities) in advance in April. The elderly survive on the goodwill of other earning members of the family. As family earnings dry up, the elderly may suffer.

3.     Enhanced payments: The Central government’s contribution to social security pensions has been stuck at Rs 200 per person per month. These must immediately be increased to at least Rs 1,000 per month. The one-off payment of Rs 1,000 over three months is just not enough.

4.     Universal coverage: Universalize social security pensions. Identifying all those who are above 60 years of age, single women is one easy way of scaling up cash transfers.

5.     Clear arrears: For NREGA workers, the Central government must clear all wage arrears from the 2019-20 financial year immediately. Apparently, an announcement has been made to this effect today, details are awaited.

6.     Cash transfers for NREGA workers: Provide 10 days wages for job card, in cash or through their bank accounts for the coming three months, without work due to risk of community transmission. This will amount to approximately Rs 2,000 per month per household for all job card holders (just under 14 crore households). This will cost approximately Rs 1 lakh crore over three months.

7.     Work guarantee for NREGA workers for later: In later months, when risk of community transmission subsides, assure them work for at least 20 days per month for those who are willing to work. In any case, 100 days of work on demand is a legal obligation of the Indian government under NREGA.

As other economic activities pick up and the work requirement is reintroduced for NREGA, the numbers will automatically fall. According to, currently only 8 crore job cards  (of 14 crore) are ‘active’.

D.     Urgent health-related measures

1.     Education, not surveillance: Deter community members from indulging in peer-to-peer surveillance. Instead, educate people regarding the importance of self-isolation.

2.     More public education: Launch very widespread messaging regarding washing hands, logic of social/physical distance, not touching their mouth, eyes and nose without washing their hands.

3.     Enhanced testing: Let people know what symptoms to watch out for, and at what stage they should approach doctors. Do not deter them from approaching doctors for fear of escalating numbers.

4.     Free testing: Scale up testing immediately. Tests should be made free, whether they are conducted by the private labs or by government.

5.     Mobilise front line workers for education: Mobilise ASHA workers, anganwadi workers and helpers, ANMs to create mass awareness about symptoms, spread and precautions. Enhance their salaries/honorarium, and provide protective gear for them.

6.     Public hygiene: Provide hand washing stations across cities, especially at railway stations and bus stations. That will send an important message.

7.     Nationalise or regulate private health services: Wherever necessary (in the case of protective equipment), the government may consider temporary nationalisation (for instance, the NHS has taken over private hospitals). At the very least the government must take step to ensure price regulation of these sectors, by taking exemplary and swift action against unscrupulous behaviour (fake testing, inflated pricing of masks, soap, sanitizers). In Chhattisgarh, the state government has taken over one private hospital (in Raipur) and reportedly in Rajasthan, the state government has done the same in Bhilwara.

8.     Listen to public health professionals: More health-related recommendations have been made by the Jan Swasthya Abhiyan, available here.

This article was originally published in Ideas for India, an economics and policy portal that publishes evidence-based analysis and commentary on issues pertaining to growth and development in India. It has been republished with permission.

Updated Date:

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