Microinsurance Cover Needed for India's Poor to Prevent COVID-19 Economic Debacle
Source: The Citizen
The misery unleashed by the COVID-19 outbreak and the subsequent lockdown on India’s poor has been well documented by now. The events that have unfolded have brought to the fore the need to provide some sort of a social security net for millions of toiling masses. In a country where most of the workforce is in the unorganized sector and there is need to provide relief to around 500 million people, the COVID-19 experience has exposed the hollowness of the social security claims by governments over decades.
A committee of experts set up in February has called for large scale expansion of the micro insurance sector. The ‘Report of the Committee on Standalone Micro Insurance Company’ submitted to the Insurance Regulatory and Development Authority of India (IRDAI) points out, “For low-income families, calamities such as illnesses, accidents, death or the loss of assets often have very grave financial consequences. Such events can push these families deeper into poverty as their meager resources get depleted. Many get drawn into debt traps as they borrow beyond their means, sell productive assets, take children out of school or put them to work, compromise on food, or leave sickness untreated. The need for low-income families to take insurance, therefore, cannot be emphasized enough, and must be a vital part of India’s financial inclusion plan.”