There is an old adage – jiska kaam ushi ko saaje – which loosely translates to she whose work it is, is best suited for it. Thus, I as a lawyer would make a terrible dance instructor. The COVID-19 pandemic has finally led the Finance Minister to speak about matters related to finance instead of the usual musical chairs where she speaks for another minister and somebody else speaks for her. Speak she did. But did the package she announce provide sufficient relief to the most affected? I do not think so.
What has been announced?
The Finance Minister announced the following:
- A relief package of Rs. 1.7 Lakh Crores under the Pradhan Mantri Garib Kalyan Yojana divided into food related and direct benefit transfers.
- On the food related front, in addition to the 5 kg of rice and/or wheat already given per month, another 5 kg rice and/or wheat free of cost to be provided for the coming 3 months. Further, 1 kg of preferred pulse to be given per household free of cost for the coming 3 months.
- On the direct benefit transfer front:
- Farmers to get Rs. 2,000/- transferred in the first week of April (presently Rs. 6,000/- per year is transferred).
- There is also a wage increase under the Mahatma Gandhi National Rural Employment Guarantee Act, 2006.
- Also, an ex-gratia amount of Rs. 1,000/- to be made available in two installments for the next three months for widows/pensioners/and disabled persons.
- Ex-gratia of Rs. 5,000/- per month for the next 3 months.
- Free LPG cylinders for the next 3 months under the Ujwala Scheme.
- Upto Rs. 20,00,000 in collateral free loans to self-help women groups (presently it is Rs. 10,00,000/-).
- Government of India to pay EPF contribution, which is 12% each for the employee and the employer (total 24% contribution) for the next 3 months for establishments with upto 100 employees where 90% of the employees draw wages less than Rs. 15,000/- per month. Further, amendments to EPFO Scheme to allow non-refundable advance of upto 3 months of salary or 75% of the amount standing to credit, whichever is lower.
- Directions have been given to State Governments to provide assistance to construction workers through the welfare fund.
- Directions to the State Governments to utilize the District Mineral Fund to curb COVID-19 with medical screening, testing etc.
There are times when any action is laudable and for that the Government has my appreciation. Late as it may be, since the first move towards curfews and lockdowns began a week prior to the March 26 press conference. In times of crisis and panic, it’s not the end that is scary but the journey through the tunnel not knowing how long the crisis would last. Lakhs of unorganized workers were wondering what they will do with their families since their employment seemed all but over for the next week, which has since become a month. Of course some employers have shown kindness and either made severance pays or are continuing to make full or partial payments. Some charitable/civil society ventures have come forth as well. But the focus of this article is to assess what could have been done to make this better, sooner?
What should have been announced?
I am not going to discuss the quantitative side of the relief issued as the Government of the day has to try and keep the budget as balanced as it can while also providing relief to the people. But I do believe 5kg of wheat/rice + 1kg of pulse per family for 3 months is on the lower side. On the qualitative side though, I believe the key step missing was home delivery of the allocated supplies. We are seeking isolation yet creating a scenario where immediately post-announcement there will be a rush to the local ration shop. Surely that is not in the spirit of the lockdown.
Farmers getting relief is vital. India remains an agrarian dominated economy. However, tenant farmers are not presently covered under the PM-KISAN regime for direct benefit transfer (Rs. 6,000/- per year + Rs. 2,000/- in April). Tenant farming is extremely prevalent in India and in a lockdown situation, the tenant farmers are adrift.
A unified message to the industry to maintain current levels of employment and wages was vital which was sadly not announced. As a corollary, employers too ought to have been given vital stimulus/relief. Employees getting paid is essential but equally essential is supporting employers who presently have near zero cash flows, existing debt, and no change of equity infusions in the immediate future. In such a scenario, a one-sided move to only support the employees would hurt the employers and therefore there must be relief for both sides. Enhancement of the insolvency provisions of the Insolvency and Bankruptcy Code, 2016, was a step in the right direction, but that is for relief when the patient is dying. What does the patient, i.e. the employer do, while he is still coughing? Medication must begin sooner rather than later. In the same vein, an income floor ought to have been fixed for individuals and individuals below said floor should have gotten moratoriums on their existing loans until such time as lockdown is in effect.
In a sample size of say 100, about 25-30 would be beneficiaries of the schemes mentioned above and the Finance Minister’s relief package. About 50-55 would either be the rich or the middle class working in the organized sector and therefore having a savings base that should see them through the next 2-3 months (generally speaking). But about 20 people are neither beneficiaries under the schemes stated above nor wealthy enough to survive on their own. These are your street people, the destitute, homeless persons, the rag pickers, etc. The streets are their homes and they are not allowed to be home anymore. Apart from serious shelter requirements, they need money and as pointed out by former Union finance minister Mr P Chidambaram in his tweet on March 25, money needs to find its way to these people immediately.
There is also the issue of transportation and while strictly not the Finance Minister’s remit, this could have been a part of the financial relief package. We take pride as a country in the fact that regardless of where our citizens are, Indian Airlines goes and gets them. Yet here we are with people stranded domestically with no buses, no trains, no flights, and literally walking miles to make their way home.
In the run-up to the General Elections in 2019, the Indian National Congress had announced its Nyuntam Aay Yojana or NYAY. This was a minimum support programme which would guarantee an income of Rs. 6,000/- per month via a direct transfer totaling Rs. 72,000/- per annum. This was proposed for about 5 crore families in India. The Government of the day criticized this as impractical, impossible, and then sought to even argue that the benefits proposed were already being given in a myriad of schemes. The obvious flaw in that response is the people who fall through the cracks and are neither in one scheme nor the other.
Yet more flawed is the argument that we do not have the money. Today the Government is already (even prior to the relief package) distributing money in the form of direct transfers and subsidies along with even some freebies on a monthly, quarterly, or annual basis. As flawed is the ‘inflation will rise’ refrain inasmuch as in a Pilot Study conducted in Madhya Pradesh during 2009-2013 (SEWA Bharat and UNICEF) showed that with rising income, people made more efficient choices. For instance, farmers used better fertilizer, sowed more crops, and were better prepared for seasonal fluctuations.
But instead of defending NYAY, which I believe is required, I am asking myself if the present relief package is basically NYAY Reboot? I think so. The Government is, under various schemes, and through food-related benefits passing money to the households covered under the various central schemes such as PM-KISAN, PMJDY, PMGKY, etc. The net outflow, of NYAY was about Rs 3.6 lakh crores for FY 2019-20. The present Rs. 1.7 lakh crores is essentially a package for the next 3 months. NYAY was cheaper, NYAY was better, only NYAY was a suggestion from the opposition and this Government does not take those.
To end, I hope we sail through this crisis together. As members of civil society, each of us can do a lot of little things. Keep paying salaries to your personal staff and household helps. If you see someone in need, provide basic assistance. In times of crisis, mental well-being is as essential as physical well-being so do not forego that. Stay at home for as long as you can and maintain social distancing. Humanity has banded together and survived two World Wars and countless epidemics. COVID-19 does not stand a chance!
Naman Joshi is a practising advocate in Delhi. After graduating from National Law University, Delhi in 2014, he worked with Karanjawala and Co. In 2017, he set up his own practice.
****Disclaimer: The views or opinions expressed are solely of the author.