• The JSBF Report

The Socio-Economic Response of the Central Government In light of COVID-19.

By Ish Dutt.

Source: Deccanherald


India is at the cusp of an extremely volatile public health and socio-economic national crisis since the imposition of the first nationwide lockdown on March 24, 2020. While the battle on COVID-19 is being fought on various fronts, it is of vital importance to understand the plight of the socially and economically disadvantaged people. With more than 80% of India's workforce employed in the informal sector[1], the pandemic has created a vast disparity in terms of a lack of food, shelter, health and of course loss of livelihood for the informal sector. It is commonly understood that it is the responsibility of the Government of India to ensure that steps are being taken towards the wellbeing of the populace but it is salient to also understand that some of these steps have “left tens of thousands of out-of-work migrant workers stranded” with essential transportation services shutdown.[2] This has created a lot of uncertainty and worry for people who have no idea on how they are going to fend for themselves and their families in this period of a lockdown.


Relief packages announced


The Government of India announced a 1.7 Lakh crore relief package under the ‘Pradhan Mantri Garib Kalyan Yojna’ in response to the issues mentioned above. This was to mainly combat the problems faced by those who required immediate help, in essence migrant and daily wage workers.[3] Other than this, the Finance Minister Mrs Nirmala Sitharaman announced a life insurance policy worth Rs 50 lakhs for frontline medic and para medic staff combatting the disease, essentially nurses, ‘ASHA’ workers, and other individuals who are fighting against COVID-19 are set to benefit.[4]

The Pradhan Garib Kalyan Yojana aims to provide benefit to around 80 crore people in India. The program promises 5 kgs of wheat or rice and 1 kg of dal each month for the next three months to be distributed through public distribution system (PDS) over and above the previously authorised entitlement.[5] There is also a focus on giving direct payments (through their bank accounts) to people faced with adverse situations. The beneficiaries from this will mainly be workers under the “Mahatma Gandhi National Rural Employment Guarantee Scheme, widow pensioners, disabled, women with Jan Dhan accounts, women running self-help groups, farmers, beneficiaries of the Employees’ Provident Fund Organisation and construction workers.” The aim is to secure the most vulnerable sections of our society in these exceptionally testing times.[6]


The fundamental question here is regarding the funds released by the Finance Ministry reaching their target audience. It can be said that to a large extent this is being done, primarily because most of the funds are credited directly to the bank account of the beneficiaries. For instance, under the 'Jan Dham' scheme, the first instalment for Rs 500 was credited to the accounts of 19,86 crore women which amounted to 97% of the accounts. Notably, this was the first of three instalments for a total of Rs 1500.[7] The Government also credited the accounts of 2.9 crore widows, senior citizen and the disabled with the first half of the two instalments at a cost 1405 crore at the start of April with the second instalment scheduled for May.[8] These are some of the schemes where the funds have been released, and they are many other such examples both at the Union and state level. There are also a farrago of other schemes that are in the process of being released, mainly, loans to Women Self Help Groups and higher MNREGA wages, to name a few things.[9]


The second question is regarding the adequacy of these funds released - whether these funds are adequate to sustain the beneficiaries. The Government as mentioned above has promised to give a certain amount of ration over the next three months which is welcome by everyone but additionally, there are no measures taken for families who do not fall inside the realm of PDS.[10] Moreover, there is a failure to acknowledge the magnitude of the problem. While the focus on vulnerable sections is a positive sign, the amount actually reaching beneficiaries is an extremely meagre amount in relation to the scale of the problem. Jayati Ghosh, a development economist and professor at the Jawaharlal Nehru University, has stated the same,[11][12] noting that the cash transfers of Rs 500 to women’s Jan Dhan’s account is a “pathetic amount”, considering it is now impossible to do any economic activity.[13] M Govinda Rao, an economist and a member of the 14th Finance Commission of India also believes that the package is not as big as it looks as many of the measures were already set to take course like the increase in wages of MNREGA workers. Moreover, there is also a failure to address the problems faced by small and medium business and of course start-ups as well where no relief has been provided yet. [14]


What needs to be done


The Government's priorities in terms of aiding people from socially and economically weaker sections by mixing components of cash and goods is a positive sign. However, there needs to be a larger concerted effort to address the true economic engines of growth namely SME’s, MSME’s and the unorganised sector. Some of them have been hit by the triple whammy of demonetisation, GST and now the adverse impact of a slowing economy coupled with COVID-19. India also has the lowest relief package as a percentage of GDP compared to other countries.

There are also a few positives - low oil prices reducing the fiscal deficit and inflation, and our pharma sector potentially becoming global suppliers for Hydro chloroquine and BCG vaccines. Further, if the Government succeeds in turning India as an alternate base for manufacturing in place of China, we have a long term plus for India.

However, in the shorter run, every life counts and no one must die of hunger, or commit suicide due to business loans. Every life at present must count, and we must emerge as a stronger and better India - socially, economically, and politically.


Ish Dutt is a 2nd Year student at JGLS.

[1] e: 'Informal Economy In South Asia (ILO In India)' (Ilo.org, 2020) <https://www.ilo.org/newdelhi/areasofwork/informal-economy/lang--en/index.htm> accessed April 17 2020. [2] Vijayta Lalwani and Vijayta Lalwani, 'Coronavirus: ‘Why Has Modi Done This?’ Rajasthan Workers Walk Back Home From Gujarat' (Scroll.in, 2020) <https://scroll.in/article/957245/coronavirus-after-lockdown-migrant-workers-take-a-long-walk-home-from-gujarat-to-rajasthan> accessed April 17 2020. [3] Ira Dugal, 'From Banks And Nbfcs To State Governments, RBI Steps In With Relief' (BloombergQuint, 2020) <https://www.bloombergquint.com/business/from-state-governments-to-banks-rbi-steps-in-with-relief> accessed April 17 2020. [4] Gulveen Aulakh, 'PM Garib Kalyan Yojna: India Begins Virus Battle With Rs 1.70 Lakh Crore Plan' (The Economic Times, 2020) <https://economictimes.indiatimes.com/news/economy/policy/pm-garib-kalyan-yojna-india-begins-virus-battle-with-rs-1-70-lakh-crore-lan/articleshow/74827960.cms?from=mdr> accessed April 18 2020. [5] Gulveen Aulakh, 'PM Garib Kalyan Yojna: India Begins Virus Battle With Rs 1.70 Lakh Crore Plan' (The Economic Times, 2020) <https://economictimes.indiatimes.com/news/economy/policy/pm-garib-kalyan-yojna-india-begins-virus-battle-with-rs-1-70-lakh-crore-plan/articleshow/74827960.cms?from=mdr> accessed April 18 2020. [6] Nikunj Ohri, '10 Government Measures To Help Poor Through Lockdown' (BloombergQuint, 2020) <https://www.bloombergquint.com/economy-finance/10-government-measures-to-help-poor-through-lockdown> accessed April 18 2020. [7] Nikunj Ohri, 'What India Has Released From Its Rs 1.7 Lakh Crore Relief Package For The Poor' (BloombergQuint, 2020) <https://www.bloombergquint.com/coronavirus-outbreak/what-india-has-released-from-its-rs-17-lakh-crore-relief-package-for-the-poor> accessed April 18 2020. [8] Nikunj Ohri, 'What India Has Released From Its Rs 1.7 Lakh Crore Relief Package For The Poor' (BloombergQuint, 2020) <https://www.bloombergquint.com/coronavirus-outbreak/what-india-has-released-from-its-rs-17-lakh-crore-relief-package-for-the-poor> accessed April 18 2020. [9] Nikunj Ohri, 'What India Has Released From Its Rs 1.7 Lakh Crore Relief Package For The Poor' (BloombergQuint, 2020) <https://www.bloombergquint.com/coronavirus-outbreak/what-india-has-released-from-its-rs-17-lakh-crore-relief-package-for-the-poor> accessed April 18 2020. [10] 'Concerned Citizens’ Response To The COVID 19 Relief Package Announced By The Finance Minister' (Caravanmagazine.in,) <https://caravanmagazine.in/noticeboard/citizens-response-to-covid-relief-package-nirmala-sitharaman> accessed April 1 9 2020. note [12] 'Why Economists Think India’S Rs 1.7 Lakh Crore Relief Is Not Enough' (BloombergQuint, 2020) <https://www.bloombergquint.com/business/why-economists-think-indias-rs-17-lakh-crore-relief-package-is-not-enough> accessed April 19 2020. [13] 'Why Economists Think India’S Rs 1.7 Lakh Crore Relief Is Not Enough' (BloombergQuint, 2020) <https://www.bloombergquint.com/business/why-economists-think-indias-rs-17-lakh-crore-relief-package-is-not-enough> accessed April 19 2020. [14] 'Why Economists Think India’S Rs 1.7 Lakh Crore Relief Is Not Enough' (BloombergQuint, 2020) <https://www.bloombergquint.com/business/why-economists-think-indias-rs-17-lakh-crore-relief-package-is-not-enough> accessed April 19 2020.



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