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Help for India's poor in the corona crisis

News from 2020-08-21 / KfW Development Bank

Billion-euro programme strengthens and reforms the Indian social system

Unterzeichnung des Vertrags unter Corona-Bedingungen im indischen Finanzministerium.
Signing of the contract under corona conditions by representatives of the Indian Government, the German Embassy and KfW at the Indian Ministry of Finance.

On behalf of the German federal government and in cooperation with the World Bank KfW is supporting the Indian government with up to EUR 460 million to implement a package of measures amounting to USD 23 billion. Initially migrant workers and other poor people will be helped directly, and in a second step the social security system will be strengthened.

India has reacted to the corona pandemic with a radical lockdown, initially limiting the number of infections. But many people lost their income because they were unable to open their shops or lost their jobs. Day labourers and the approximately nine million migrant workers are particularly hard hit.

Up to 800 million people now receive food aid in the form of wheat, rice or similar products from the Indian government's aid package. In addition, 320 million Indians receive financial aid. On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) KfW is supporting the Indian Ministry of Finance in shouldering these burdens. The aid is distributed locally through an existing network of more than 500,000 Fair Price Shops and local governments, also leveraging self-help groups and citizen-oriented organisations. A separate health insurance scheme is to be set up for indispensable staff in the health sector. The majority of the beneficiaries are women.

Eine indische Familie beim Kochen vor ihrem Haus in einer indischen Vorstadt.
With the loan KfW helps to secure the advancements in poverty reduction against the effects of the corona crisis.

This fast, direct support will prevent people in need from having to sell their production equipment or starve. This will prevent a plunge into extreme poverty and facilitate a revival of the economy after the pandemic has subsided. In addition to KfW, other donors support the World Bank in assisting the Indian government in this emergency situation. A binding matrix of individual policy measures was jointly agreed upon, to which the disbursements of the KfW loan and the support from the World Bank are linked.

In a second phase towards the end of the year the Indian social security system is to be strengthened. So far there are some 465 different social support programmes in the country, which are hardly interlinked at all. They are now to be gradually combined and integrated into a sustainably strengthened social security system. Up to now, the programmes have often been targeted at the poor in rural areas, but from now on they will also include assistance for those affected in the cities.

In recent years, India has succeeded in significantly reducing the proportion of people who earn less than USD 1.90 a day. These advancements in poverty reduction are now being called into question by the pandemic. The World Bank programme supported by KfW is designed to help prevent many people from falling back into extreme poverty.

Contact

KfW Development Bank

Phone

+49 69 74 31-42 60

eMail

info@kfw-entwicklungsbank.de