Redesigning India’s Social Protection Financing Architecture to meet the Challenge of COVID-19

Redesigning India’s Social Protection Financing Architecture to meet the Challenge of COVID-19

Centre for Policy Research
21 April 2020

States are at the frontlines in the battle against COVID 19. The key areas which need significant short and medium-term interventions – health, agriculture and social protection – are state subjects. However, States are stymied by the lack of resources.  While many experts have debated the means by which the centre can enhance resources, relatively little discussion has been had on the architecture of financing. This is critical as the nature of COVID-19 is such that its impact will be felt differentially across states. This requires an agile financing system that is responsive to state needs. Against this backdrop, it is critical to re-consider the design of the current intergovernmental fiscal transfer system for responding to the health and social protection needs of COVID-19. In this note, we propose a reformed architecture, based on the principles of decentralisation, consolidation, and convergence. The institutional foundations of this reformed fiscal structure will lie in the creation of a new emergency council within the fold of the Inter-State Council.