India to get $1 billion from World Bank to aid its fight against COVID-19
The World Bank has announced that its board of executive directors have approved a $1 billion support plan for India as part of the ‘Accelerating India’s COVID-19 Social Protection Response Program’.
With this support, the total commitment from World Bank to India to tackle COVID-19 is $2 billion. Last month, it announced a $1 billion support for the country’s healthcare sector.
World Bank said in a statement that this will support India’s efforts at providing social assistance to the poor and vulnerable households impacted by COVID-19.
The $1 billion aid will be offered in two phases, starting with an immediate allocation of $750 million for the fiscal year of 2020, followed by another tranche of $250 million for FY2021.
The first tranche of $250 million will be made available after June 30, 2020.
Two phase implementation
World Bank said in a statement that the first phase will be implemented across the country 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,” World Bank said in a statement.
In the second phase, this program will be deepened with a social protection package. Additional cash and in-kind benefits will be extended based on local needs through state governments and portable social protection delivery systems.
‘Social protection’, World Bank said, 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% 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 programs in India largely provide benefits to residents within states, without adequate portability of benefits across state boundaries. Importantly, in an urbanizing India cities and towns will need targeted support as India’s largest social protection programs are focused on rural populations,” it added.
World Bank today announced a $1 billion support to accelerate India’s social assistance to the most vulnerable households across the country. With increased cash and food benefits, the program will ensure a safety net for the poorest during this crisis.
— World Bank India (@WorldBankIndia) May 15, 2020
https://t.co/Ehenr5FhAz pic.twitter.com/yOJFwle8v0
The programme with help India move into an integrated system that will be a combination of over 460 fragmented social protection schemes. The idea is to have a system that is fast and more flexible, acknowledging the diversity of needs across states.
The programme will also enable geographic portability of social protection benefits that can be accessed from anywhere in the country, ensuring food, social insurance and cash-support for all, including for migrants and the urban poor.
Finally, the program will extend the country’s social protection system to recognise the needs of the urban poor with a pan-India focus, instead of a rural focus.
The program will be implemented by the Ministry of Finance, Government of India.
“This program will support the Government of India’s efforts towards a more consolidated delivery platform – accessible to both rural and urban populations across state boundaries. The platform draws on the country’s existing architecture of safety nets – the PDS, the digital and banking infrastructure, and Aadhaar – while positioning the overall social protection system for the needs of a 21st century India. Importantly, such a system will need to leverage India’s federalism enabling and supporting states to respond quickly and effectively in their context,” Junaid Ahmad, World Bank Country Director in India said in a statement.
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 on standard IBRD terms.