OUR FIRST PRINCIPLES
We believe that there are three crucial first principles while trying to mitigate this:
- Local, grassroots initiatives and organizations know best. While mobility is at its lowest in years, local organizations have the best reach and network to isolate and aid the most vulnerable.
- Cash relief is the most effective and the most scalable way of addressing this. We have seen that food distribution has been our natural reaction. To be fair, it is better than nothing, but we believe getting cash in the hands of the most vulnerable is the most effective. Why? Because there is evidence. And more evidence, especially in emergencies like this. And more. In a nutshell, cash fuels demand. Yes it can be expensive, but in these times, it’s our best bet.
- While doing cash transfers, targeting is expensive, so we should be okay with saturation. This means that if 80% of households in India are to receive monthly direct cash transfers, there are bound to be some people who don’t necessarily need the money. This is generally the minority and trying to exclude them can be more expensive than letting them be included in the saturation. In other words, don’t solve for the exceptions.
THE sOLUTION (POTENTIALLY)
Based on the above first principles, we believe that every household that could be economically impacted by the response to this pandemic should receive monthly cash transfers.
Who? How much? Untill when? Yes, a lot of unknowns mean a lot of assumptions. Let’s break it down.
WHO: There are 256 million households that have either have a “BPL” Ration Card or a Jan Dhan account. Each household in India averages 4.2 people (as per the latest Periodic Labour Force survey in 2018). So, that equates to over a billion people or ~80% of the population. We assumed that this population is the most impacted by COVID-19. Yes it’s not perfect. Everyone that has been impacted by this doesn’t necessarily have a ration card or a Jan Dhan account, but It’s a large enough number, and takes into consideration poor casual labourers and migrant workers. The other option is to take the entire population which might be excessive. So for now, let’s stick to 80% of the population.
- Wheat – 35 KG
- Bajri – 10 KG
- Rice – 5 KG
- Sugar – 3 KG
- Salt – 1 KG
- Channa Dal – 1 KG
- Masoor Dal – 1KG
- Peanuts – 1 KG
- Rai – 100 GM
- Jeera – 100 GM
- Chilly powder – 200 GM
- Kirti Gold Oil – 4 Nos
- Parachute oil – 200 GM
- Colgate – 200 GM
- Soap – 3 Nos
- Wheel Soap – 2 Nos
- Tea leaves- 250 GM
- Nirma Powder – 500 GMS
Rs 3,000 might be less for a bigger city or more for a smaller town or a village, so it serves a decent average / median assumption. So let’s assume that each household needs at least Rs. 3,000 / month to procure bare necessities
Rs 3,000 a month for 80% of the population equates to Rs. 77 thousand crores / month for all impacted household.
UNTIL WHEN: This one really depends. Definitely during the period of the lockdown (~2 months) and for another 1 months after as the economy starts up again. So 4 months at the minimum.
So, to summarize, for 3 months of cash relief for 80% of the impacted population, the amount of money that is needed is:
Rs 77 thousand crores / month * 3 months = ~Rs 2.3 lakh crores
It’s important to note that while this might be the ideal solution, it doesn’t mean that other solutions won’t work. For instance, many local non-profits are doing food distribution as a relief effort. If that is the only local initiative happening in a small town, it is still better than nothing. Reach is paramount.