The Centre’s Covid relief package hasn’t cast the net wide enough

| Updated on March 26, 2020 Published on March 26, 2020

Finance Minister Nirmala Sitharaman   -  PTI

The Covid relief package largely focuses on food security; businesses need urgent help too

The ₹1.7 lakh crore Prime Minister’s Gareeb Kalyan Yojana seeks to address the immediate food security concerns of working people hit by Covid-19. In a salutary move, the Centre has sought to double the per capita entitlement of cereal (rice or wheat) to 10 kg, with the additional five kg to be given free during the period of crisis. This will cover 80 crore people, both in rural and urban India. The Centre has done well to introduce pulses in this package. With food inflation already rearing its head in a time of lockdown-induced shortage, providing free rations can stave off hunger, signs of which are disturbingly evident even in the Capital where large numbers are lining up for a meal around community kitchens set up by the Delhi government. The other positives are: collateral-free loans to women SHGs and a transfer of ₹500 per month for the next three months to the 20 crore Jan Dhan accounts held by women. The remaining 15 crore Jan Dhan accounts held by men are presumably to be covered under PM Kisan Samman Nidhi transfers, assuming that they are landowners. Higher transfers under MGNREGA would have addressed the concerns of the landless households. That said, the package may at least alleviate rural distress to an extent.

However, the Yojana has a basic flaw: it is aimed at easing immediate distress rather than protecting livelihoods and ensuring continuity of businesses. Hence, in the rural sector the crisis in poultry (culled by fake news over Covid) and horticulture have been overlooked. Scores of workers in the MSME sector have been left to fend for themselves, with nothing on offer for these already struggling units. The Centre should have announced a relief package for MSMEs, in the nature of NPA forbearance and easier loan terms as the UK and US have done. Instead of merely shouldering the EPF contribution of the employee and employer, the Centre could have considered an incentive for keeping all employees, permanent and contract, on the rolls. The result of this oversight is only too visible: desperate workers who have lost their jobs are actually walking hundreds of kilometres back to their villages in the hope of being more secure there. This predominantly rural relief package may encourage this trend, even as there are no means of transport to make this journey.

It is to be hoped that the Centre’s ₹15,000 crore health infrastructure programme will create jobs for the urban workforce. Indeed, the entire Budget should be recast in view of new expenditure priorities arising out of Covid-19. It may take three months to beat back the virus; but the economic effects are likely to persist for much longer than the duration of the relief measures announced by the Finance Minister on Thursday.

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Published on March 26, 2020
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