Alongside in-kind transfers, the PMGKY also included cash transfer schemes. Women Jan Dhan account holders were promised a monthly cash transfer of I500 during the months of April, May Sources and notes: India Working Survey 2020 (IWS). Respondents were asked about grains received in the month prior to the interview. See Appendix Section 4 for survey sample details.
Figure 7.1 : Distribution of households by amount of PDS grain received
7. Effectiveness of the Covid-19 policy response
the 2021-22 Union Budget documents). In per capita terms, India falls well short of the global average on the size of the cash transfer. On average, total Covid relief cash transfers have amounted to 32 per cent of a month's GDP per capita, varying between 26 per cent in upper middle-income countries to 40 per cent for lower middle-income (the group India belongs to), to 86 per cent in low income countries (Gentilini, Almenfi, and Dale 2020). India’s total transfer of I1500 amounted to 12 per cent of a month's GDP per capita (approximately I13,000).
Another measure of the inadequacy of cash support is that in Azim Premji University CLIPS, respondents whose households received Jan Dhan transfers, had lost earnings of around I1,200 in just the month prior to when the interviews were conducted (October-November), let alone the interim period between April and October. Further, as we saw in Chapter Five, CMIE-CPHS data reveal that the poorest 10 per cent of households experienced a loss of I15,700 over these months.
Thus the size of cash support fell well short of the size of the income shock for vulnerable households.
Another problem, that emerges from the surveys, is that Jan Dhan accounts have a low level of penetration. Of course, compared to PDS or even NSAP, Jan Dhan is a much newer programme and both penetration and use should increase over time.
However, the fact remains that 48 per cent of rural respondent households and 63 per cent of urban respondent households in Azim Premji University CLIPS did not have a Jan Dhan account. Amongst those that did have an account, 70 per cent received cash payments (Figure 7.2a). However, only 32 per cent of account holding households had received all three transfers as of October-November
2020 (the transfers were scheduled for April, May, and June). 35 per cent received two transfers and 21 per cent received only one transfer (Figure 7.2b).
In IWS (conducted in August-September 2020), there were no large rural-urban differences, but there were state-level differences in the share of households having women-owned accounts- 44 per cent of households in Karnataka and 68 per cent in Rajasthan. Among BPL and Antyodaya card holders, penetration was marginally higher (45 per cent in Karnataka and 70 per cent in Rajasthan). Conditional on having a woman-owned Jan Dhan account in the household, 71 per cent of respondents in Karnataka and 76 per cent in Rajasthan reported receiving transfers. Once again, as in CLIPS, around 30 per cent reported receiving all three transfers. The full distribution of transfers in both states is shown in Figure 7.2c.
In the Dalberg survey, again, 73 per cent of eligible low-income households had received cash under Jan Dhan but only 56 per cent of low-income households reported having Jan Dhan accounts
in the first place. Rural coverage was fully ten percentage points higher than urban (59 per cent versus 49 per cent). As a part of their overall work on the response of rural communities to the Covid crisis, RCRC conducted a survey of 10,992 women Jan Dhan account holders in 51 districts spread over 10 states. 66 per cent of active Jan Dhan account holders had received I500 while another 20 per cent did not know. In the Indus Action survey, 60 per cent of households reported receiving Jan Dhan transfers (Table 3 of report).
Thus taken together, we have multiple, independent sources of information on the penetration of Jan Dhan accounts as well as the receipt of cash transfers. These are broadly consistent with each other in showing penetration levels of around 50 per cent among poor
Conditional on having a woman-owned Jan Dhan account in the household, 71 per cent of
respondents in Karnataka and 76 per cent in
Rajasthan reported receiving transfers.
Sources and notes: Azim Premji University CLIPS (October-November 2020) and India Working Survey Figure 7.2a :
Proportion of
households receiving Jan Dhan transfers (CLIPS)
Figure 7.2b : Number of transfers received in Jan Dhan account (CLIPS)
Figure 7.2c : Number of transfers received in Jan Dhan account (IWS)
7. Effectiveness of the Covid-19 policy response
households as well as in the finding that around 70 per cent of eligible households received at least some cash. The former is also consistent with the findings from a study by Somanchi and others, reported in the
previous chapter, that 46 per cent of all households are likely to be excluded from cash transfers if delivered via Jan Dhan accounts.9 Hence, in the immediate future, if a second round of transfers is undertaken (as we propose it should), it is worth considering other avenues of reaching the cash to poor households, in addition to Jan Dhan accounts.
The failure in reaching 30 per cent of eligible households is concerning, especially given the level of distress that prevails during the pandemic. And it is possible that this arises from more general failures in the Direct Benefit Transfer (DBT) system.
Some clues as to why this may have occurred come from a recent study on delivery of social welfare entitlements conducted by the community radio organization, Gram Vaani, in collaboration with Dvara Research (Seth, Gupta, and Johri 2021). The study is based on documentation of complaints received on community radio.10 It finds that the most common type of exclusion in the DBT system, accounting for 84 per cent of complaints, is failure to credit the beneficiary’s account. The report identifies several stages in the system where problems may arise which can form the empirical basis for reforming the system and ensuring better delivery.
Finally, there is the question of the ‘last mile.’ Even when cash does reach bank accounts, it may not be accessible due to poor banking infrastructure (we saw some evidence for this in the previous chapter).
As per the RCRC survey, nearly 50 per cent of households either did not try to withdraw cash (43 per cent) or were not successful when they tried (6 per cent). The principal reasons for not withdrawing were prohibitions due to lockdown rules (41 per
cent), health concerns (21 per cent) and crowding in banks/ATMs (21 per cent).11
Some surveys have also collected information on other central and state cash transfer schemes.
Around 31 per cent of rural respondents in CLIPS owned land and were eligible to receive cash under the PM-KISAN scheme. Around half of the General category farming households did receive it, but only 10 per cent of Scheduled Tribe households and 20 per cent of Scheduled Caste households engaged in farming received the transfer. The survey also reports the share of households who received at least one Covid relief cash transfer from either the central or the state government. It finds that 36 per cent of all urban and 58 per cent of all rural vulnerable households received some cash. Muslim households were least likely to receive even a single cash transfer compared to Hindus and other religious groups. Inter-state migrant households were once again the worst-off with two–thirds of such households not receiving any transfer. In the Dalberg survey, the coverage is better with 84 per cent of low-income households being covered under one of four cash transfer schemes (Jan Dhan, pension, PM Ujjwala, or PM KISAN) and 81 per cent receiving at least some form of cash assistance in May.
To sum up, two main recommendations arise from the cash transfer experience during the pandemic.
First, the financial infrastructure needed to reach vulnerable households requires significant expansion and second, the size of the cash transfers (even if we include the state programmes) fell far short of what was needed given the magnitude of the shock and must be expanded.