Putting money into the hands of people is the clarion call made by many, social activists, experts and opposition political leaders in India in order to tide over the economic crisis caused by Covid 19. About 93% of India’s workforce is in the unorganized sector and they contribute about 50% of the GDP (Gross National Product). Although the worldwide lockdown has impacted all sectors of the economy, the most adversely affected are the workers in the unorganized sector. According to the first National Commission on Labour (1966-89), the main categories of unorganized sector in India are construction workers, labourers employed in small scale and cottage industry, casual labour, handloom/ power loom workers, beedi and cigar workers, employees in shops and commercial establishments, sweepers and scavengers, workers in tanneries, tribal labour and other unprotected labour.
Migrant workers constitute a large chunk of the unorganized sector workers. The number of migrant workers in India is estimated to be between 8 and 12 crore. There are two types of migrant workers within India: inter-state migrants and intra state migrants. The exodus of migrant workers due to the nationwide lockdown has shown that large majority of them are inter-state migrants. The nationwide lockdown and the consequent constant flow of migrant workers, thousands of them walking or cycling, towards their homes have exposed not only their vulnerability but also the insensitivity of the government and of the judiciary.
The Supreme Court also failed them. “How can we stop migrants from walking”, the Supreme Court is reported to have asked while hearing a petition under Public Interest Litigation. When the issue of 16 migrants being run over by a goods train, while they were sleeping on the railway tracks, was brought to the attention of the court, the bench said, “How can anybody stop this when they sleep on railway tracks?” The suggestion of direct transfer of money to the poor gained urgency because of the pathetic situation of the millions of migrant workers who were walking hundreds of kilometres to reach back their homes.
Rahul Gandhi during his press conference on May 16 made a fervent appeal to the Prime Minister to directly transfer money to the account of poor people. He told the PM to consider the poor as sons and daughters. “The mother or the father does not give him a bank loan, they do not give him credit. A mother is ready to give whatever food she has to her daughter or son and the government should follow that spirit,” he said. He also told the PM that the people who are suffering, walking on an empty stomach are India’s future and we have to support them. Another important suggestion given by him was to double the allocation for MNREGA through which money will directly come to the people in the form of wages.
Rahul Gandhi tried to convince the government the absolute need for putting money into the hands of the people. According to him, the country is going to face a tempest of economic crisis perhaps worse than the Coronavirus crisis. Hence revival of economy is equally important as the fight against the coronovirus. For reviving the economy he has suggested creating demand along with strengthening the supply side. According to assessment, most of the items proposed in the rupees twenty lakh core economic package promised by the PM and unveiled by the Finance Minister are meant for strengthening the supply side and bulk of the amount is in the form of loans. Without demand from the people production will not get momentum. Due to the lockdown and the consequent loss of employment millions of people like migrant labourers, street vendors and those who are involved in small and cottage industries do not have money in their pockets. When the government puts money into their pockets they will be spending and it will automatically generate demand.
The view of Rahul Gandhi was endorsed by the Nobel Laureate, Abhijit Banerjee. While talking to Congress Rahul Gandhi through video-conferencing, he suggested giving money into the hands of the bottom 60 per cent population to help reviving demand.
Azim Premji of Wipro, the biggest contributor to philanthropy in India, expressed support to the view of putting money directly into the hands of people in an article written in ‘Economic Times’ on May 16. He put forward certain suggestions that are very relevant to Indian situation.
· Provide emergency cash relief of 7,000 rupees a month for every poor household for three months.
· Expand MNREGA by allocating additional fund along with increasing the number of guaranteed working days per household and increasing wages.
· Universalise and double the PDS ration for 3-6 months and distribute it free through doorstep delivery along with cooking oil, pulses, salt, masala, sanitary pads and soap in advance to all.
· Allow the stranded migrant workers to travel for free on buses or trains.
· Initiate urban Employment Guarantee Scheme similar to the MNREGA and ensure timely payment of wages.
· Increase public investment in agriculture for promoting sustainable faming initiatives, stronger procurement systems and value addition for perishable crops.
Many developed countries also have adopted the method of direct transfer of money to people in order to tide over the economic crisis caused by Covid 19. The US is implementing one of the biggest income transfer schemes of about one lakh rupees for every citizen, besides unemployment allowance to more than 30 million workers who have lost their jobs. Germany announced a generous package of financial support to people who lost employment. Relief and support measures announced by Canadian government received appreciation for covering individuals from various walks of life and various businesses.
When Prime Minister, Narendra Modi announced an economic package of rupees 20 lakh crore to support people affected by Covid 19 as well as to revive economy, all were expecting direct transfer of fund to the migrant workers and other poor sections of the unorganized sector. But when the Finance Minister completed unveiling of the contents of the package in five stages, many critics termed it ‘hollow’ from within. It was like pealing onion. Brinda Karat analysed the whole package and came to the conclusion that the actual spending by the government will be between 2 lakh and 4.2 lakh crores. It is far from the 10% of GDP claim. It would be just 1 to 2 percent of the GDP, lowest among the Covid 19 relief packages in the world.
According to Anand Sharma of the Congress, the government’s economic package is only of 3.22 lakh crores and only 1.6 percent of India’s GDP. He said that there is difference between giving stimulus to the economy and providing loans and credit to people. Bulk of the 20 lakh crore package is promise of loans. What the distressed people need is, not loan but money to cope up with life. The former Finance Minister P Chidambaram made a terse comment. “My one line comment on FM’s fourth tranche: No fiscal measures, ZILCH.” He also said that the fiscal prudence should not be at the cost of starving people. He accused the government of suffering from ignorance and fear.
Another serious criticism is that the entire package is designed not to support the workers and the poor but to push forward the agenda of pro-corporate reforms. The package includes commercial mining in coal sector, corporatization of Ordinance Factory Board and removal of restrictions on Indian airspace. A whole host of privatisation and PPPs have been announced in electricity distribution, social infrastructure and even allowing the private sector to use ISRO facilities! Under the shadow of the pandemic Covid 19 the government is planning to open up sensitive sectors like defence, airspace and aerospace to private entities and foreign companies. “When migrants can’t reach home safely, Finance Minister is talking of opening up planetary exploration and outer space travel to private sector. Bizzare!” said Jairam Ramesh of the Congress.
The State governments are meeting most of the expenses related to fighting the pandemic, but the economic package has left them in lurch. The Telengana Chief Minister K Chandrasekar Rao accused the Modi government of treating the States like “beggars” and imposing laughable conditions for increasing borrowing limits under the Fiscal Responsibility and Budget Management (FRBM) Act.
By invoking the provisions of Disaster Management Act 2005 the BJP government at the Centre is undermining the Federal structure of India. Much of what the Ministry of Home Affairs is issuing in its orders under the Disaster Management Act impacts the sates, local bodies and the fundamental rights of citizens. The Centre without consulting the States unilaterally declared national lockdown. There was no consultation with the states regarding what activities should be allowed and should not be allowed. According to the constitution, health comes under the State list. Hence the Centre should have allowed the States to take much of the decision under the broad guidelines given by the former. When the Centre has found that its highly centralized and unilateral approach of the Central government is not yielding the desired result, the States are gradually given the autonomy to take decisions. But the treasuries of the State government are getting empty without any considerable financial support from the Centre.
The governments all over the world are facing huge economic crisis along with Covid 19 crisis. India is not an exception. Experts say that the GDP growth of India in the current financial year could be negative. During the lockdown an estimated 14 core people lost job. More than 45% of households across the country have reported income drop as compared to previous year. Hence revival of economy along with alleviating the sufferings of the poor people, particularly of the workers in the unorganized sector, should be the topmost priority of the Central government. The Central government should enter into dialogue with the States and the opposition parties on the issue of reviving economy and it must be ready to make changes in the package already announced. It should listen to the suggestion of experts and opposition parties to put more money into the hands of poor people along with the long terms plans for economic revival.
(Published on 25th May 2020, Volume XXXII, Issue 22)