On May 12, following six weeks of national discourse around the acute distress faced by migrant and informal sector workers as a result of India’s Covid-19 lockdown, Prime Minister Narendra Modi announced an economic package for “atmanirbhar” or self-reliant India. He claimed the economic package would come to Rs 20 lakh crore or about 10% of the country’s GDP.
At first, it seemed like the government was redeeming itself for the hardships faced by people and the inadequacy of the earlier-announced Pradhan Mantri Garib Kalyan Anna Yojana. However, as Finance Minister Nirmala Sitharaman revealed the finer details of the package over coming days, it became clear that much of it involved liquidity- and credit-easing measures and does not encompass much expenditure from the government’s coffers.
Even for those elements that do require fiscal spending, the expenditure spreads over a period of years, as is the case of the scheme for affordable rental housing for migrant workers and urban poor. Many experts have pointed out that this package fails to respond to the current crisis, especially because it does not involve substantial government spending, which is required to boost consumption demand and, through the multiplier mechanism, revive the economy.
What is even more disappointing is that the current package fails to address the immediate crisis faced by the country.
No immediate relief
Everyone is familiar with the heart-wrenching images of migrants walking on highways, going without food for days trying to reach their homes. A number of micro surveys have highlighted the extent of hunger, drop in incomes, destitution and destruction of livelihoods.
Centre for Monitoring Indian Economy data, for instance, finds that the proportion of households who said that their finances were worse compared to a year ago has risen to 45% in the first fortnight of April 2020 from 8%-9% in January and February.
Further, they find that the unemployment rate was as high as 27% in the week ending on May 3 and 114 million jobs were lost in April, with small traders and wage labourers bearing most of the brunt. The economic package announced so far has very little for these sections of the population. The credit-easing measures do not address them directly at all.
Two interventions that should have been undertaken to provide some amount of immediate relief to the people who have been most affected by the suspension of economic activity are universal provision of food and some form of income support.
While the finance minister’s announcement did make a mention of 5 kg of food grains for free for eight crore migrant workers, this is vastly inadequate given the scale of the problem. Estimates by economists Jean Drèze, Reetika Khera and Meghana Mungikar show that another 10 crore people have to be added to even meet the legally-mandated requirement of covering 67% of the population under the National Food Security Act.
This response is, therefore, inadequate and completely misses the urgency of the situation. As has been repeatedly argued by many, the only way in which foodgrains can immediately reach all those who need it is to make the public distribution system universal.
Bureaucratic maze
A simple announcement that anyone who is in need of grains can approach the nearest fair price shop or food distribution system could ensure that there are no exclusion errors. The distribution could be made on the basis of any identity card that the person carries and indelible ink can be used as a marker to ensure that there is no duplication.
Instead, what we have is a system where state governments are to come up with detailed guidelines for identification of migrants. It is likely that this will once again get into definitional issues of who migrants are, how they will verify the same, and so on.
Even in a system where there were no stringent criteria, like in Delhi, a requirement of online enrolment for e-coupons excludes many. About 50 lakh people have been issued e-coupons and only around 25 lakh people were given rations in the first round. The distribution has been suspended since May 15, ironically due to labour shortage issues.
Anecdotal experience also suggests a large number of people were not able to access this online system or reach the MPs or MLAs to enrol for their quotas. It is obvious that the demand is immense and the complicated online system has only created delays and barriers. Delhi continues to see reports of people trying to walk back to their native places, reporting being hungry for the last few days. These people would probably have got some basic rations if the system was simpler, where they just had to approach a ration shop or school, rather than one that required access to a smartphone and some literacy.
Cash transfers in the form of income support are equally essential at a time when many people have lost their jobs or have not been paid for the past month or two. Experts have recommended that a cash transfer of at least Rs 7,000 per household should be made for two or three months to help people tide over the economic stagnation.
While the distribution of rations is something that is immediately possible, cash transfers are more difficult to achieve. The government did announce a few such provisions under the Pradhan Mantri Garib Kalyan Anna Yojana, such as transfers for women Jan Dhan Yojana account holders, old age, widow and disability pensioners. However, reports show that many have not been able to actually get hold of the cash due to difficulties in accessing bank branches, dormant accounts and not knowing which account they have got the money in.
Moreover, the amount – Rs 500 a month – was too small to make a substantial difference. The least the government could have done was to announce a large-scale cash transfer programme of a higher amount, covering all those whose account numbers they have under various Direct Benefit Transfer schemes and National Rural Employment Guarantee Act accounts, which are used more actively. This would have still left out a large number of people, but surely reached out to many more in need.
While this a crisis of unprecedented scale, there is no justification for allowing people to go hungry and lose all dignity in a democratic society. It is clear that the government has not done even the basic minimum that it could to protect the rights and entitlements of people.
