One of the relief measures in the Union government’s ₹1.7 trillion covid-19 package announced on 26 March was a cash transfer programme for the poor. Around 200 million female Jan Dhan account holders were promised ₹500 per month from April till June. The cash support was necessary in the prevailing situation, but the choice of beneficiary may have excluded around 40% of poor households, an analysis shows.
In Ideas for India, an online platform for economics and policy research, Anmol Somanchi of IIM Ahmedabad argues that crisis relief needs to be progressive, minimize exclusion, and reach beneficiaries reliably and timely. He, however, finds that around 53% of the poor and 61% of rural women may not even have a Jan Dhan account needed to get the cash benefit.
To estimate the exclusion, Somanchi uses data from the World Bank, the National Family Health Survey, and Financial Inclusion Insights. The researcher finds that 38% of poor families and 46% of rural families were unlikely to have any female Jan Dhan account holder, thus excluding them from the relief package.
This shows that making only women with Jan Dhan accounts eligible for the cash transfer can exclude a large section of the poor and rural households at a time of crisis. Further, even those eligible for the package can face roadblocks, such as low bank and ATM density in rural areas, and Aadhaar authentication glitches, Somanchi argues.
To plug these gaps and cover the most vulnerable, the government could rely on beneficiary lists from other welfare schemes such as the public distribution system and the Mahatma Gandhi National Rural Employment Guarantee Scheme, the author suggests.
Somanchi also says that the cash benefit of ₹500 per month is too little, even for the poorest of households.