Woes Of Migrant Labour: Will One-Nation, One-Ration Card Programme Transform Welfare Delivery? 

Covid-19 pandemic has brought to the forefront some longstanding structural flaws in our apparatus for public welfare delivery.

Many of these flaws go back to the socialist relic of Mai-baap sarkar that makes citizens perennially dependent on the generosity and discretion of the bureaucracy.

Although the NDA government headed by Narendra Modi has been committed to reforming several public welfare and public service delivery systems, everyone agrees there is much left to be accomplished.

One such issue that has risen to national spotlight is the plight of migrant labour during the Covid-19 induced lockdown.

News reports suggest that some of them are facing hunger and poverty at the places they are stuck.

Media analysts posit that it is this desperation that is driving these migrant labourers to undertake the arduous journey of getting back home by foot/cycles.

This article analyses how the one-nation, one-ration card programme that has been on the anvil for quite some time, can address this issue and more generally transform welfare delivery for the future.

The migrant labour problem

The Economic Survey of India 2017 estimated that 9 million people annually go out of state for work.

Census 2011 pegs the total number of inter-state migrants to be 139 million. This figure was 41 million in the 2001 census. By extrapolation, we estimate the size of inter-state migrant labour to be around 220 million (22 crore).

A large majority of these migrants move from the relatively poor northern and eastern states, towards the more industrialised western and southern states of India.

These migrant labourers are mostly unregistered in the system. For example, an estimate suggests that among the 55 million construction workers, roughly 51 million (94 per cent) do not have the BOCW registration card, making them ineligible to receive targeted cash transfers.

Similarly 14 million (25 per cent) of these construction workers have never had/not renewed their ration card.

An added complexity is that a vast majority of these migrant labourers work on temporary contracts, via a labour contractor.

They are not on the payroll of their primary employers. Furthermore, many of these labourers work out of state only for 9 months in the year and return home during the sowing/festival season.

Hence, these migrant labourers are like stateless ghosts who do not exist on the record; making it extremely hard for welfare delivery.

Woes of migrant labour

The biggest problem for migrant labour families is that their ration cards (if renewed) are only registered at their home state.

They do not transfer their ration cards for three reasons. They move frequently and hence the transaction cost of transferring is very high.

Secondly, they live in temporary, or sometimes make-shift accommodations that do not have a permanent address.

Thirdly, they usually leave a part of their family at their home state who need the ration card.

Hence, they find it impossible to avail of the welfare benefits, including the subsidised grains from the public distribution system.

During the current Covid-19 induced lockdown period, there are several complaints that migrant labour are suffering from hunger and poverty. There are multiple explanations to this tragedy.

Because of the closure of roadside eateries and small restaurants, those who couldn’t cook, found it difficult to find food.

Those who could cook didn’t find grains/groceries of their choice, or didn’t have cash to procure them.

Since the lockdown came at the end of the financial year, many businesses were short of cash and hadn’t paid their wages.

Thus, hunger and poverty plagued them to varying degrees.

The central government on its part used the JAM digital stack (Jan Dhan – Aaadhar – Mobile) to disburse cash handouts to vulnerable sections of the society.

They deposited Rs 28,256 crore to Rs 31.77 crore beneficiaries in April, including those holding Kisan cards.

Among this include 20 crore women Jan Dhan account holders who received Rs. 500 each. But sadly, not all migrant labourers come under one of these identifiable categories.

The labour departments of states asked employers and labour contractors to compile a list of migrant labourers for providing cash support.

But owing to poor responsiveness and inefficiency in compilation, this exercise hasn’t been completed.

In one of the press meets, our finance minister suggested that an estimated 84 per cent of the funds earmarked for cash disbursement to migrant labour remains unutilised by the states.

To summarise, the scale and spread of migrant labour, the fact that they are undocumented and off-the-record, and the dependency on labour contractors to compile the list of beneficiaries, are some of the factors that make last-mile welfare delivery extremely tough for the government apparatus.

This also highlights the structural flaws and inadequacy of the existing welfare delivery models.

Pull versus Push systems

Welfare delivery systems can be classified into two broad types viz. pull and push systems. Push systems rely on using institutional capacity to deliver the welfare benefits directly to the targeted beneficiaries. An example is how voter slips are pushed to the voters a few days before the election. Pull systems rely on communicating to the public and making them apply and avail the welfare benefits targeted at them.

For example, education scholarships for deserving students are delivered in this manner.

India has had a history of over-reliance on pull systems to deliver public welfare. This institutional infrastructure is what is often derisively mocked at as mai-baap sarkar. The success of its delivery lies in the hands of the bureaucracy; in terms of communicating to the public, selecting the beneficiaries, and actually delivering the benefit.

This model is highly vulnerable to information asymmetry, incorrect targeting, leakages, and corruption.

Enough has been written elsewhere about the pathetic performance of this model, since the days of Independence.

This is one of the reasons why the NDA government under Modi decided to go for a push-based system. The heart of the push based system is a reliable nationwide database that can slice and dice beneficiaries according to whatever target criteria one is looking for.

This is a capability that Aadhar database has given. It then requires an efficient and leakage proof mechanism to deliver the benefit.

Aadhar authentication via mobile and aadhar-linked jan-dhan account provides this delivery infrastructure.

That is why many international bodies and experts have praised JAM trinity stack as a fine example of home-grown, technology-driven push system for efficient welfare delivery.

However push systems are not a panacea for welfare delivery. Their success is limited by how well one can slice and dice the database to identify target beneficiaries. This ability is dependent on the comprehensiveness and freshness of the demographic data fields.

Furthermore, inter-linkages with other government databases are also critical. Given the resistance of data privacy activists and some of the other lobbies that favour the old system, Aadhar database suffers on all fronts.

But even if these data quality issues are resolved in the future, not everyone meeting the target criteria would actually want a particular welfare benefit.

This is because people are always stochastically distributed in their consumer preferences.

Hence no amount of push can identify the exact set of beneficiaries who want that particular welfare benefit.

To illustrate business equivalence, no matter how great the algorithm used by the Amazon recommendation engine is, it can never show the right recommended product to all the right customers.

So, where does that leave us?

We need a ‘self-selection’ based mechanism that enables the right beneficiary to ‘pull’ the right welfare benefit.

At the same time, we don’t want to be bogged down by all the problems that plague the conventional pull-based welfare system.

The Hybrid system

This is where the conceived idea of “one nation, one ration card” comes in. This idea is path breaking, because it is a hybrid system that tries to marry the best of both pull and push based systems.

It works as a push system because the entitlements of a beneficiary can be determined by slicing and dicing of the demographic data.

It works as a pull system because the beneficiary can pull whatever he and his family want, at different times, at different places, within his entitlement.

In this system, the beneficiaries are enrolled by the state government. The ration cards issued by states bear a nationally unique identifier of each beneficiary; and not just the household.

According to the 2013 Food Security Act, every individual is entitled to Rice at 3 Rs/kg, Wheat at 2 Rs/kg, and coarse grains at 1 Re/kg.

But this is just a start. Since the beneficiary identifier is linked to the Aadhar database, by slicing and dicing of the data, it is feasible to set/determine various other welfare benefits a person is entitled to.

This powerful aspect makes this infrastructure scalable for delivery of many future welfare schemes.

The fair price shops that distribute PDS grains have been given a point-of-sales (POS) device that works on Aadhar linked biometric authentication.

This system ensures efficient and leakage-free delivery.

But more importantly, this mechanism allows the beneficiary to personalise the benefits he wants to draw.

He can personalise what he wants, how much he wants, and where he wants,

He can draw different grains from time-to-time that suit his need.

He can also draw partially at his work state and his family can draw the balance at their home state.

The family can be on the move and draw benefits in a hassle-free manner.

This flexibility and personalisation is what makes this infrastructure special; overcoming the problems with push-based systems.

But such a flexible system poses a big challenge in terms of supply chain, inventory, and trans-shipment management.

The government has invested in the development of the IM-PDS portal (Integrated management – public distribution system) and the annavritan portal for this purpose.

They provide the necessary backend infrastructure for supply management and potentially transfer pricing between states.

So where are we with the roll-out of this programme?

For the past five years, the central government has worked closely with the states to Aadhar link the beneficiaries on the ration card.

They have also been working with the states to get biometric-based POS machines installed at the fair price shops.

Currently, 20 states/UTs have come onboard.

The original launch date of this programme was 20 June 2020. This may, of course, be revised owing to the Covid-19 crisis.

Transforming welfare delivery

The one-nation, one-ration card system has the potential to be a true transformer of welfare delivery.

This will transform lives of not only migrant labour, but all citizens.

As discussed above, this system addresses all the critical requirements of migrant labourers to receive their entitled welfare benefits; especially as per their delivery preferences.

One wishes such a system was already in place across the country. Had it been the case, a large part of the hardships faced by migrant labour during the lockdown would have drastically reduced.

The potential of this hybrid system is such that it provides a scalable infrastructure for delivering all welfare benefits that are delivered in kind to the target beneficiaries; just like JAM trinity can deliver all benefits in cash.

One only hopes that the remaining states quickly come onboard, as this system has the potential to truly transform welfare delivery.