Editorial Notes

[Editorial Notes] Charting a Common Minimum Relief Programme

Despite 21 days lockdown, the economic pandemic that is likely to succeed COVID-19 threatens to be as large in scale if not larger than the public health crisis that we continue to battle.
By IASToppers
April 10, 2020

Contents

  • Introduction
  • Areas of concern in Common Minimum Relief Programme
  • Concern for Wage earners, labourers and migrant workers
  • Concern for Framers
  • Concern for Supply chain
  • Concern for Medium and Small-Scale Enterprises
  • Concern for Middle class
  • Two suggestions
  • Conclusion

Charting a Common Minimum Relief Programme

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Introduction

  • While States will come up with varying measures for support and relief, the Centre must lead this effort to ensure uniformity and coordination amongst States of varying economic capability.

Areas of concern in Common Minimum Relief Programme

Concern for Wage earners, labourers and migrant workers

  • First, daily wage earners, labourers and migrant workers are at the greatest risk of economic and social insecurity.
  • The sheer importance of a social security net in helping them tide over this predicted period of unemployment and privation cannot be overstated.
  • Recently, eight National Trade Unions wrote to the Minister for Labour and Employment to prevent the loss of employment and livelihood and asked for protections against evictions.
  • Most importantly, they asked for members of the unorganised sector to be covered by a robust cash and food distribution system. 
  • This concern is extremely legitimate and urgent given that over 80% of the population is currently employed in the unorganised sector.
  • There should be a uniform mechanism for the dispersal of both income support as well as essential items such as rice, wheat, millets, medicines, water and anything else that these families will require.

Concern for Framers

  • Second, farmers are in dire need of immediate support. Having faced the wrath of unseasonal and inclement weather, the wheat and other Rabi crops are ready for harvesting.
  • But due to the lockdown, the ensuing unavailability of seasonal labour and lack of clarity on procuring arrangements, agencies and prices, the farmer is left in the lurch.
  • Given the vital role agriculture, the resulting crisis is likely to have a widespread negative impact on food security nationwide.
  • Furthermore, and to ensure the problem doesn’t become cyclical, the government needs to make immediate arrangements for ensuring the availability of fertilisers, pesticides, other inputs (including access to lines of credit) for the planting of the next kharif crop as well.

Concern for Supply chain

  • Third, supply chain disruptions for fast moving consumer goods due to unavailability of labour, difficulty in transporting goods across borders during the lockdown is leading to a shortage of foodstuffs and other essential items.
  • This in turn is leading to massive hoarding, black marketing and runaway inflation.
  • This needs to be addressed head on instead of in an ad-hoc manner if mass panic is to be avoided post the lockdown.

Concern for Medium and Small-Scale Enterprises

  • Fourth, Medium and Small-Scale Enterprises need a clear buffer strategy for survival.
  • There are currently close to 4.25 crore registered MSMEs which contribute 29% to India’s GDP (or nearly 61 lakh crores) and these have been hit hardest by the COVID-19 crisis.
  • Unlike their large-scale corporate counterparts, they cannot survive beyond a period of two or three months at the most.
  • The government must lay out an action plan, including a financial package, to fortify this sector or risk see it perish.

Concern for Middle class

  • Fifth, the middle class is facing growing vulnerability and needs to be protected. Companies and employers are cuttings salaries and even declaring layoffs to cope with this time.
  • This is aggravated by unjustifiably high petrol, diesel and gas prices. The twin strategy of increased EMI’s (as a result of deferment) and the lowered interest rates on all small savings schemes have had the exact opposite of a desired impact.
  • To wit, they have reduced the value of savings while simultaneously increasing debt obligations.
  • A long-term plan for economic revival is needed if the middle class is to emerge stronger on the other side of this crisis.

Two suggestions

  • Nyuntam Aay Yojana, a proposed social welfare program, aims to distribute cash to 20 %t of India’s poorest families as a minimum guarantee programme. Implementation of this programme will give much needed security — both financial and mental — to those who have no other sources of income due to the lockdown.  
  • The other measure is to strengthen manufacture and production policies by an extensive financial package with an impetus on local manufacturing.

Conclusion

The ₹1.7 trillion fiscal package announced by the Indian government may appear generous, but falls too short of the level of fiscal spending needed to deal with a humanitarian crisis of this scale.

Hence, there is need now is to expand India’s safety net through social-sector spending much wider.

As we protect the vulnerable among us, we also need to rethink our economic policies so that greater emphasis is laid on social protection and expansion of basic services such as health, education and other basics. The pandemic allows us that opportunity.

Ignoring this economic crisis may lead to a larger human catastrophe than what we would prevent through an aggressive response aimed at only containing the virus.

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