INBI seeks to partner India Post for cash transfer experiment

Tina Edwin New Delhi | Updated on June 01, 2020

The money will be sent to the identified beneficiaries as electronic money orders through India Post

Even as the Union Government continues to stonewall demands for emergency cash transfers as a measure to mitigate the financial crisis - that daily wage earners and migrant workers who lost their jobs are facing - the India Network for Basic Income (INBI), in association with India Post is set to launch a pilot project on cash transfers.

INBI is a member of the London-based Basic Income Earth Network (BIEN). Both - INBI and BIEN - have been advocating basic income transfers to mitigate hardships faced by the poor in India and globally.

“The pilot project is intended to be a proof of concept to demonstrate the efficacy of a leak-proof delivery of basic income to individual recipients,” INBI coordinator and BIEN vice-chair Sarath Davala said. The objective is two-fold – to provide some relief to the distressed workers and, to demonstrate how the India Post’s vast network can be used to transfer money to the intended beneficiaries. INBI proposes to use electronic money orders (eMO) service of India Post to transfer cash to the identified beneficiaries in different states.

Dr Davala said that the proposal involves transferring Rs 2,000 per month for a period of six months to a select set of migrant workers who have returned to their villages in despair. The finer details of the experiment are yet to be finalised but India Post with its network of over 1.5 lakh post offices across India has expressed a keen interest to be part of the project. India Post will offer its services on a commercial basis, which means it will earn 5 per cent of the money transferred as delivery charges.

The plan is to transfer such amount to individual migrant workers who left Hyderabad to return to their homes in states such as Chhattisgarh, Jharkhand, Bihar, Uttar Pradesh, Odisha and West Bengal. While the sum is small, it is reckoned that it will help the individual to buy some food, medicines and other essentials.

Why India Post

INBI has chosen to partner with India Post for eMO instead of transferring the amount to bank accounts to ensure that the full amount reaches the beneficiaries. The bank accounts of many of these people are either lying dormant or defaulted on minimum balance norms. When money is transferred into such bank accounts, the banks automatically deduct a penalty for failure to maintain a minimum balance and charge for activating a dormant account. Such deductions can be avoided when money is transferred through India Post’s eMO.

It is also felt that eMO is more efficient for disbursing basic income cash transfers as the money can be delivered to the individual physically by the postal staff, authentication protocol for the recipient is easier and it is also portable as money can be delivered wherever the individual worker is.

Dr Davala said INBI has already successfully tested this mode of cash transfers in the early days of the lockdown when it transferred a smaller amount to some stranded migrant workers in Secunderabad and that both INBI and India Post were ready to scale it up to other states.

INBI has a database of daily-wagers, self-employer and other migrant workers – all of who was helped by the network to travel back to their homes – and that it would select a group of people from this database for the direct cash transfer experiment.

Proof of concept

Dr Davala added that INBI intends to approach the central and state governments with the results of the proposed pilot project to convince them that such a model of cash transfer to the vulnerable can be scaled up country-wide. “It is governments that have to implement the basic income policy because it only governments that can reach out to populations on a scale,” he said, adding that civic groups can only design and demonstrate good practices.

Published on June 01, 2020

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