Nirmala Sitharaman has come up with a Rs 1.7 lakh crore package to mitigate the misery caused by the coronavirus pandemic and the resulting shutdown of the national economy. But her challenge is so big, nay humongous, that what she unveiled on Thursday is essentially a relief package for the poor, and not a stimulus package for business and industry.
Without offering a stimulus to the corporate sector, it will be hard to successfully ensure the transition of the economy from the current no-growth to a normal phase in a hurry.
Dalal Street might be enthused more by the cues emanating from the Wall Street than from any domestic developments, though the additional disbursal of funds to the poor in a way produces liquidity of its own and to that extent boosts sentiment. Admittedly, there is every reason to cheer the grant of the much-needed assistance to the millions severely hit by the abrupt shutdown. Overnight, livelihoods have been lost. And these people have nothing to fall back on.
A modern state owes it to them to provide proper succour. A slew of measures announced by the Finance Minister under the rubric of the PM Gareeb Kalyan Yojana seek to address the immediate problems of the poor and the destitute.
From additional rice, wheat and pulses to 80 crore people, to a Rs 500 ex-gratia for widows, old aged and disabled people, free cooking gas cylinders for three months to over eight crore below-the-poverty-line families, there is much that should help the economic victims of the lockdown to tide over the crisis. Health workers are assured of a Rs 50 lakh life insurance each.
Nearly nine crore farmers would receive the first instalment of the annual Rs. 6,000 relief immediately beginning April 1. Building and construction workers numbering over 3.5 crores will get cash relief from Rs 31,000 crore fund collected for the purpose over the years.
EPF members can avail 75 per cent non-refundable advance or three months wages, whichever is lower. This should benefit 4.8 crore workers. The government will also pay the EPF contribution of both the employer and the employee in establishments with less than 100 people on payroll and drawing less Rs 15,000 per month.
There are a few other section-specific reliefs in the Rs 1.71 crore package. And to the extent these are to be implemented immediately it should help relieve the hardships of the poorer sections of the society.
Meanwhile, the fact that it is a three month package would suggest that the government reckons that it may last this long for normalcy to return, that is, in case we are able to prevent the community transmission of coronavirus in the current three-week-long national lockout. Hopefully, with the cooperation of the people we don’t have to suffer the deadly effect of the pandemic beyond the timeline drawn up by the finance minister for her relief package for the poor.
Meanwhile, the corporate sector as well as the micro, small and medium businesses as also the self-employed and salaried professionals would now be keenly waiting to hear from Sitharaman. According to one estimate, at least 75 per cent of the economy is standstill.
A three-month shutdown is too long for it to sustain without a generous helping hand from the government. This section contributes the lion’s share of the taxes. To restore its good health is crucial for the revival of growth which may have slipped to anything below four per cent in the current year due to the pandemic blow.
