A step in the right direction, but more needed to help poor
On the second day of the three-week curfew announced by the prime minister, Union Finance Minister Nirmala Sitharaman came out with a slew of measures for the poor to address the disruption in the economy. The Rs 1.7 lakh crore relief is bunched in silos. For the most vulnerable, Direct Benefit Transfer (DBT) will provide farmers with the first instalment of Rs 2,000 from the Rs 6,000-a-year PM-KISAN scheme, while two crore senior citizens and disabled will get Rs 1,000 each.
Construction workers, who now face joblessness, will get aid from the Rs 31,000 crore Construction Workers Fund. Then there is the free five kg of grains every month over the next three months. The relief measures are a step in the right direction, but more needs to be done to alleviate the suffering of the poor, as the economic losses they will face are unprecedented. Back-of-the-envelope calculations show the disruption and destruction of wealth over the coronavirus lockdown will be far greater than what we saw after demonetisation.
British brokerage Barclays has estimated the cost of the economic paralysis at Rs 9 lakh crore or around 4% of GDP. Similarly, Nomura Holdings says 75% of the country’s economy will shut down during the curfew period leading to a production loss of 4.5%.Further, there is double accounting in the relief package. The Rs 31,000 crore for construction workers and Rs 2,000 from the Rs 6,000-a-year-per-farmer in direct transfer have been budgeted for earlier and are not fresh reliefs.
Withdrawal of provident fund monies is giving access to employees to their own savings, and is no skin off the back of the government’s kitty; Rs 1,000 for the old and infirm for this shutdown period is not good enough. As has been repeatedly pointed out, survival money has to be put directly in the accounts of those who are likely to suffer the most—jobless casual workers and immigrants who have fled the cities. The government should address the shortcomings and come out with further measures soon.