Social security for India during the coronavirus pandemic

• Up to EUR 460 million for expansion of the Indian social security system
• First loan signed for EUR 250 million
• Additional food for 800 million and cash transfers for 320 million people in need

On behalf of the Federal Ministry for Economic Cooperation and Development (BMZ), KfW signed a loan agreement with the Indian Ministry of Finance amounting to EUR 250 million for the COVID-19 Social Protection Crisis Response Programme. A second phase is already planned. Overall, the aim is to provide the Indian government with up to EUR 460 million in support for additional social security measures, the total cost of which will amount to around USD 23 billion.

KfW’s support during the first phase will provide additional food to 800 million people and cash transfers to 320 million affected individuals in an effort to quickly cope with the coronavirus crisis. These measures also benefit around nine million migrant workers who were not adequately taken into account in India’s previously existing programmes. Furthermore, separate health insurance will be set up for key workers in the health sector. The majority of beneficiaries are women.

“The internationally unprecedented lockdown in India has serious economic and social impacts. Employees in the informal sector make up around 90% of the Indian labour market and are particularly affected. In these times of crisis, it is paramount that the remarkable development achieved by India during the last few years be maintained, and the Indian government receives support to progress towards a crisis-proof social security network”, emphasised Prof. Dr Joachim Nagel, Member of the Executive Board at KfW Group.

India is heavily affected by the global COVID-19 pandemic and there is reason to fear that the devastating socio-economic impacts could throw large segments of the population back into extreme poverty as a result of an economic downturn and large-scale job losses. So a second phase is also planned to start in the fourth quarter of 2020, which will provide further support for the social security system through long-term institutional reforms. The objective is to integrate India’s over 460 different social security programmes into a flexible and adaptable system. Moreover, the previous rural focus of the programmes will be expanded to include those in need in urban regions.

The COVID-19 Social Protection Crisis Response Programme is a parallel financing with the World Bank, and includes participation of other bilateral and multilateral donors. The World Bank is the lead agency.