The government should ensure that matters of lives and livelihoods are not pitted against each other
The COVID-19 pandemic and the prolonged national lockdown have brought the Indian economy to a standstill. In tackling the crisis, the Centre has not done much to enable States to benefit from the much-touted benefits of “cooperative federalism”. States are struggling to cope with the unprecedented existential challenges they face. The Centre has relentlessly undermined the immediate necessity for making appropriate financial provisions to enable States to meet the challenge. Most States have already shared their concerns on the inadequate fiscal support from the Centre. Where has India’s money gone? What will happen with the unspent money in the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM CARES) Fund?
Too modest a package
At the end of March, the Centre had announced a stimulus package of ₹1.7-lakh crore, out of which about ₹1.2-lakh crore was the existing entitlement. It was too modest considering the severity of the COVID-19 crisis. After about a month and a half, Prime Minister Narendra Modi, in his address to the nation on May 12, announced a package of ₹20-lakh crore without mentioning anything specific for stranded migrant workers and for re-structuring micro, small and medium enterprises (MSMEs). Industry has been demanding a package to the tune of 7% to 8% of India’s GDP of over $2.8 trillion, nothing unusual given that similar packages have been announced by other countries to mitigate the damage done to their economies. However, keeping the government’s silence in mind, India Inc. revised its demand for a package to as low as 3% of the GDP. So, a package of the size of almost 10% of the GDP was offered like a masterstroke but without coming clear on the source of funding and oversight provision. The buck was passed to the Finance Minister and, surprisingly, no call was taken on the lockdown.
The presentation by the Finance Minister, which was more a five-episode package for television, has proved to be a damp squib. There was only word play with nothing for migrant workers, farmers, daily wage earners and the poor facing destitution. On MSMEs, the announcements offer no major concessions; soft loan, PF and tax provisions are shrewd. The redefinition of MSMEs has been long-pending and cannot be called a reform. There is nothing for the States to look forward to that can serve the immediate purpose.
Since MSMEs have been the hardest hit, being the main employers of industrial workers, their plight is grim. It is small businesses that give traction to entrepreneurial activities in the unorganised sector where migrants from rural India mostly work. Sadly, the process of economic revival has not even commenced and industry is in dire straits. The package that has been announced is too late and too flawed. Ideally, after the first round of an insufficient package, the government should have begun consultations with parliamentarians, Opposition parties and industry representatives to prepare a well-thought-out relief package to re-start the economy. Alas, this did not happen. States which have been at the forefront of the war against COVID-19 have not been given the required funds to help them cope with the public health emergency and support the high influx of returning migrant labourers from industrial locations.
India’s great middle class, which is also suffering, has found no solace either; nor is it likely that they will get anything substantial from this package. A large number of workers in the organised sector are facing heavy pay cuts, job losses, a sharp fall in income, and uncertainty. Farmers are finding it difficult to get the minimum support price for their produce; a majority of them are in debt and face many obstacles.
Plight of the migrant workers
The first national lockdown was announced in the most dramatic manner by the Prime Minister late in the evening and without adequate notice. This created panic among migrants who were suddenly left without any income security. A vast majority of them lost their livelihoods and were threatened more by the prospect of death by starvation than by the virus. And they have walked thousands of kilometres to go back home to States such as Bihar, Uttar Pradesh and Madhya Pradesh — because, for them, a home-coming was the last resort to stay alive. Instead of action by the government, the helping hands seem to be from the Opposition, charitable individuals and social organisations. Such painful displacement could have been avoided by offering industry a timely financial package. Now India faces the loss of lives and livelihoods against the backdrop of the ruling dispensation’s apathy towards the poor and the disadvantaged.
On May 1, some Shramik Express trains were flagged off from certain destinations to take back migrant workers to their home States, but there was another shock — the charges levied by the Indian Railways. How can this be justified in a situation such as this? What is the meaning of being a citizen of this country? On May 4, the president of the Indian National Congress made an assurance that the Congress would bear the cost of travel for poor migrants. Sensing the imminent political loss on this issue, the ruling BJP issued a statement that the Railways would cover 85% of the cost with the State concerned covering the remainder. It is the BJP that is answering queries, when it should be the Government of India that should take up a leadership role in a crisis situation.
Full coverage | Lockdown displaces lakhs of migrants
It was expected that the government would accord priority to cutting out wasteful expenditure on projects such as the Central Vista project and the bullet train project and, instead, manage the available resources of the Reserve Bank of India, the Employees’ State Insurance Corporation, the Employees’ Provident Fund Organisation and the PM CARES Fund to help the poor. This was not to be. The central bank should have been busy with restoring the health of the financial sector and also concerned itself with considering the suggestions of former RBI Governors Raghuram Rajan and C. Rangarajan on adopting an altruistic approach in place of the one driven merely by fiscal and inflationary concerns.
Stimulus that is delayed and flawed is tantamount to justice denied. Whatever the false compliments India may receive for tackling the pandemic, the fact remains that the country is at a crossroads as a result of late and wrong decisions. The government should follow a single policy, namely people first. The matters of lives and livelihoods should not be pitted against each other. Both issues have to be taken care of simultaneously. The nation is passing through a grave crisis in which a state of denial can be counterproductive. India’s economy is no longer capable of absorbing the shocks from monumental blunders already committed. The country must be rescued from this terrible mess. Mere rhetoric will not help.
Yashwant Sinha is India’s former Minister of Finance (1998-2002) and Minister of External Affairs (2002-2004). Atul K. Thakur is a Delhi-based policy professional and columnist