Clipped from: https://timesofindia.indiatimes.com/
By Abhishek Singhvi and Jaiveer Shergill
The Indian government, in an attempt to paint a rosy picture on a cactus canvas, has lauded itself for achieving a lower “doubling rate” and a lower death rate in comparison to other countries like the US, UK, Germany, France and Spain. Good as it always is to find a silver lining among dark pandemic clouds, the administration must ‘take the good with the bad’ and adopt ‘best practices’ of other countries qua efficacy and reach of its fiscal vaccine. Not practising global best practices and not adopting them in practice is a bad form of preaching without practice.
The PM’s fiscal package, “instalmentalised” by the FM, fails the core twin tests of ‘proportionality and protection’, in terms of intent and content, when subjected to any global yardstick. Simple nitty gritty analysis of the arithmetic yields the unpleasant verdict that the direct Covid-related fiscal injection, at the highest, does not exceed 1% of GDP.
Given the magnitude of the disaster faced by humanity this depicts the same tragic imbalance as between a quail and an elephant, or between a mountain and a molehill. The need of the hour was not to confuse, confound or cover the reeling common man in a maze of financial jugglery, verbiage, jargon or jumla, but to show the real colour of money (and that too in his pocket), while providing the economically wounded public a sense of instant justice, a true healing touch without the speed breakers of illusion and delayed delivery.
Some international comparisons illustrate the humongous inadequacy of the Indian package in the global context. For example, India has announced a Rs 3 lakh crore Credit Guarantee Fund to provide collateral free loan to 45 lakh MSMEs (covering only 8% of the existing 6 crore MSMEs) with a 12 month payment moratorium, which neither provides them with extra income nor frees them from the vicious cycle of interest loaded loan repayments.
In comparison, realising the importance of immediate surgery rather than a band-aid approach, UK’s young FM Rishi Sunak announced a ‘wage protection package’ whereby the government treasury will bear 80% of most categories of workers’/ employees’ salary, totalling up to £2,500 per employee per month, provided that the employer retains the staff. Similarly, the US has launched a ‘paycheck protection program’, which gives the option to employers to avail non-returnable loans, provided that 75% of the loan amount is used for salary payments or rehiring the staff, failing which the loan has to be returned within 2 years with a meagre 1% interest cost.
Further, under the US Cares Act, passenger airline companies will receive $25 billion direct aid to enable the airline industry to continue to disburse salaries and benefits to employees. The figures do not matter; the intent and the approach do. India has failed its devastated segments on both.
Rather than keeping its most vulnerable sections in the waiting lounge of uncertainty, the government should have directly transferred Rs 7,500 into Jan Dhan accounts and thrown a lifebuoy in the form of monthly allowances to the youth, fast drowning at the deep end of the pool of unemployment. Brazil, by contrast, launched an ‘emergency salary’ programme disbursing $120 per month for the next three months (beginning April) to informal sector workers, aggregating $43 billion (Rs 3.5 lakh crore).
Closer home, Japan adopted the ‘cash delivery’ model offering $930 to every citizen. The Canadian government, by its Canada Emergency Student Benefit (CESB), provided $1,250 per month to college going students, in addition and not in derogation to any other benefits they may be eligible for.
It is difficult to imagine reasons preventing direct deposit of Rs 65,000 crore (as suggested by ex-RBI governor Raghuram Rajan), amounting to merely 0.325% of GDP, in the hands of the migrant labour force. Or what hindered the launching of a ‘wage protection package’ for the MSME sector and a ‘salary protection’ package for the middle and lower middle classes who have faced the cold blast of unemployment? Or waiver of interest on student loans totalling Rs 75,000 crore from public sector banks?
Fiscal prudence is not cast in stone. Nor is it an ostrich in the sand doctrine, oblivious of the storm surrounding it. If printing money or increasing FRBM limits to 6% is not done even during the worst calamity to hit modern India, one wonders when it can be?
India, the birthplace of Buddha, should have emulated his dictum of receiving wisdom, irrespective of its source. It had to have an eclectic approach of adopting as many best practices available globally as it could, subject to its capacity. It cannot ride the shining steed of “superpower Indian nationalism” on the one hand and behave like a mouse when it comes to large heartedness for its deprived and afflicted sections on the other.
Milton’s phrase “all is not lost” must inspire the government to revisit, restructure and relaunch the financial package, to not stand on form or ego and to make direct benefit transfers, demand generation, kickstarting consumption and job loss protection its telling buzzwords and bylines, before everything is indeed lost.
Abhishek Singhvi is an MP and senior national spokesperson, Congress. Jaiveer Shergill is an advocate and national spokesperson, Congress. Views are personal