* Editorial 1
A package for ₹5-lakh crore-₹6-lakh crore targeted across different sections of society and the economy, is feasible
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India has just finished a day of curfew and clapping to practise ‘social distancing’ and to express gratitude to the millions of health and essential services workers amid the COVID-19 pandemic. It was a laudable initiative by the Prime Minister to rally the nation together. The nation is truly at war, as he alluded to, and it can be won only by everyone coming together in this ‘tragedy of the commons’.
But just two days before our clapping, the Indian-origin Finance Minister of the United Kingdom unveiled the U.K.’s biggest economic recovery package in its history, as an antidote to the crisis; there is no fixed cost to it. The United States is finalising a trillion-dollar economic recovery package, while Germany is going ahead with ‘unlimited government financing’ for the disruptions due to the outbreak. France, Spain, Italy and the Netherlands have all launched a half-a-trillion dollars combined in recovery measures. If this reads like panic, consider this one data point — the number of people who lost their jobs, in just the last two weeks in America is the highest ever weekly job losses recorded in its history. These large, developed economies are expected to not merely slow down, but to contract and experience negative growth. The economic devastation will be much more painful and longer than the health impact.
While the rest of the world has sprung into action, India has merely announced the setting up of a task force under the Finance Minister to explore economic recovery options. This lackadaisical approach is unconscionable. Contrary to rhetoric, neither will India be immune to this imminent economic crisis nor will some ‘preternatural force’ insulate us from this epidemic. It is prudent to swing into action right away to soften the inevitable economic blow.
There are already reports that a third of all restaurants could shut down in the formal sector alone and shed more than 20 lakh jobs, in the coming months. The entire automotive sector is shutting down its factories, putting at risk the incomes of a million people employed in this sector. When people lose their jobs, entire families suffer, consumption drops and overall demand collapses. When businesses close down, then they default on their commercial obligations down the chain and to their financiers. This freezes up credit flow in the economy and halts production. Since this is a global crisis, it is not even possible for India to import and export its way to recovery. Under such painful conditions, India needs a comprehensive recovery package that will first cushion the shock and then help the economy recover.
A three-step plan
In my discussions with former Finance Minister P. Chidambaram and economists, there was near unanimity that the package should rest on four pillars: providing a safety net for the affected; addressing disruptions in the real economy; unclogging the impending liquidity squeeze in the financial system, and incentivising the external sector of trade and commerce. So here is a broad plan for a ‘COVID-19 Economic Recovery Package for India’.
The destruction of jobs, incomes and consumption can be addressed through a direct cash transfer of ₹3,000 a month, for six months, to the 12 crore, bottom half of all Indian households. This will cost nearly ₹2.2-lakh crore and reach 60 crore beneficiaries, covering agricultural labourers, farmers, daily wage earners, informal sector workers and others. It is important that this is not just a one-month income boost but, instead, a sustained income stream for at least six months for the millions who have lost their incomes, to provide them a safety net and a sense of confidence. The Pradhan Mantri Kisan Samman Nidhi (PM KISAN) programme with a budget of ₹75,000 crore can be subsumed into this programme.
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) must be expanded and retooled into a public works programme, to build much-needed hospitals, clinics, rural roads and other infrastructure. This can be achieved by integrating MGNREGA with the Pradhan Mantri Gram Sadak Yojana and the roads and bridges programme. These three programmes together have a budget of nearly ₹1.5 lakh crore. This must be doubled to ₹3 lakh crore and serve as a true ‘Right to Work’ scheme for every Indian who needs it.
In addition, the Food Corporation of India is overflowing with excess rice, wheat and unmilled paddy stocks — enough excess stock to provide 10kg rice and wheat to every Indian family, free of cost, through the Public Distribution System.
This combination, of a basic income of ₹3,000 a month, a right to work and food grains, will provide a secure safety net.
COVID-19 testing, treatment, medical equipment and supplies capacity can be expanded through the private sector and be reimbursed directly for patient care. This will need a budget of ₹1.5- lakh crore for testing and treating at least 20 crore Indians through the private sector. This will help create a large number of jobs in the private health-care sector, with trickle-down benefits.
Steps for the central bank
The Reserve Bank of India (RBI) announced a ₹1.5-lakh crore liquidity and credit backstop facility on Monday, which is a very welcome move. Further, the RBI should show regulatory forbearance and also set up a credit guarantee fund for distressed borrowers for credit rollover and deferred loan obligation.
The central bank must also immediately reduce interest rates drastically to spur business activity. A two-year tax holiday and an appropriate incentive scheme must be designed for exports and service sectors that have been devastated (airlines, tourism, hospitality, entertainment, logistics, textiles, leather). This could cost the exchequer between ₹1-lakh crore and ₹2-lakh crore.
Finding the money
In sum, the total incremental expenditure for the recovery package will be between ₹5-lakh crore to ₹6-lakh crore for FY2021. The next obvious question is: Where is the money for this?
The ₹5-lakh crore to ₹6-lakh crore recovery package can be funded largely thorough three sources — reallocation of some of the budgeted capital expenditure, expenditure rationalisation, and the oil bonanza.
Given the extraordinary situation the world is facing, it is important to reprioritise our expenditure plan in the near term. The government had budgeted more than ₹4-lakh crore in capital expenditure for FY2021. This will, unfortunately, have to be reworked and some part of it allocated to the COVID-19 recovery package. For example, there is a budget of ₹40,000 crore for the revival of the telecom public sector units which can be delayed and the amount reallocated.
Similarly, the budget of nearly ₹1-lakh crore for national highways, roads and bridges can be rationalised to reallocate this to the recovery package. It is possible to extract a total of ₹1-lakh crore for the package out of the ₹4-lakhcrore budgeted capital expenditure for FY2021.
Fifty-four ministries in the Union government of India made a demand for grants and a total of ₹30-lakh crore has been budgeted as total expenditure for FY2021. Of these, 13 large ministries account for as much of the Budget expenditure as the remaining 41 ministries combined. There is ample scope to rationalise expenditure in these 41 ministries to extract ₹2-lakh crore for the recovery package.
The blessing in disguise for India is the dramatic fall in global crude oil prices —from $40 a barrel to an estimated $20 a barrel — which can help save nearly ₹2-lakh crore; this can be used to fund the recovery package or make up for shortfall of tax revenues.
To be sure, there will be a fiscal implication of this stimulus package and the fiscal deficit will rise driven both by increased expenditure and shortfall of revenues from the slowing economy. But now is not the time for fiscal conservatism.
It is often asked why the States cannot embark on an economic stimulus plan. The States combined incur an expenditure of ₹40 lakh crore. There can be some sharing of expenditure of the recovery package of ₹1-2 lakh crore by the States. But after Goods and Services Tax (GST), States do not have the fiscal freedom to raise tax revenues on their own. They are largely dependent on the Centre for their tax revenues through direct taxes and GST.
In summary, India needs an immediate relief package of ₹5-lakh crore to ₹6-lakh crore targeted across all sections of society and sectors of the economy. Though daunting, the money for this can be found through detailed analysis and some bold thinking. The global economy is headed for a dark phase and it is our duty to rise to the challenge to secure the future of all Indians.
It is time to think big, bold and radical to pull our economy out of this crisis. This is India’s moment for the equivalent of the “New Deal” that U.S. President Franklin Roosevelt launched in America after the Great Depression of 1929.
Praveen Chakravarty is a political economist and a senior office-bearer of the Congress party. The article has been written with inputs from former Finance Minister P Chidambaram and other economists and policy experts
In their response to the pandemic, countries have hardly evinced concern about the health and well-being of workers
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The coronavirus that causes the COVID-19 disease is the first neoliberal virus in the world. To say so is not to reduce its dangers — particularly to the already vulnerable, such as the old, the ill or the poor (who cannot isolate without starving) — but to criticise how it has been confronted by most governments across the world. This even applies to the better social welfare capitalist States of Europe — such as Denmark, where I live.
Hits and misses
On March 12, Denmark largely shut down for at least two weeks, as did many other European nations, with the exception of the United Kingdom and some others. There were about 500 known cases in Denmark then, out of a population of six million. This shutdown was necessary, and could have been implemented a few days earlier.
However, other necessary things were not and, at the moment I write this essay (17th March), are still not being implemented.
One of the most crucial is testing. Denmark, like many other European nations, is testing only acute cases. If you have mild symptoms — and at least a hundred other diseases give you the same symptoms — you are simply expected to self-isolate (in doubt). At the same time, Denmark has sealed its borders — a political gesture in the absence of widespread internal testing. It is also surprising that while it takes two to four days for test results to become available in rich western nations, it takes only four hours in the afflicted regions of China.
So, what do we make of this? Evidently, it is a neoliberal response, despite the structure of social welfare and a very good health system in countries such as Denmark. A major burden of stopping the virus has been passed on to ordinary citizens, who now have to isolate themselves even if they just have the common cold, while the government issues directives but spends as little as possible. This is not surprising. For the past two decades, whenever corporations or significant banks have stumbled, national governments have pumped public money into them, while cutting public services (including health and research) to raise the money. This has happened everywhere. It is happening again.
any days ago, Denmark provided $50-billion to its businesses to cope with the economic downturn caused by the virus crisis. Even before accepting that it was a threat, Trump’s U.S. provided $1.5-trillion to its businesses and financial sectors. After finally declaring a national emergency, Mr. Trump added another $700-billion for American corporations. The U.K., which is still partly in denial, is sanctioning $900-billion for its businesses. As have other nations.
Such buffering of the national economy is necessary. But there are two major problems. Most of this money is not being strictly earmarked to preserve jobs, and the lowest wage earners are particularly ignored. Scandinavian Airlines has already suspended 10,000 jobs. Many other workers have been fired by corporations in different countries. But Bernie Sanders seems to be the only western politician who is insisting that handouts should be tied to preserving jobs for the bottom 95%, not to buffering share values for the top 5%. The other problem is that almost no country has put in comparable amounts into the health, social and educational aspects of combating the pandemic.
There are rumours that the virus scare in China, added to the subterranean racism of the West when anything bad is reported in non-white nations, sent American and European investors on a panicked selling spree. They got rid of their controlling shares in significant Chinese sectors at a pittance, and these were bought up by the Chinese government or Chinese investors. Now, with China seemingly in control of the virus, it might be that it has also regained more control over its own economy and sectors. On the other side, American Congress and Senate representatives sold off their shares, based on confidential briefings, just before the U.S. market fell. Once again, a neoliberal virus: a process that will continue in areas like digitalisation and robotisation, with effects on working rights.
The U.K. was the first country to openly concede that many people will need to die before the virus is controlled. Critics pointed out that, given the lack of sufficient action to control the spread of the virus, what politicians were saying was this: “The virus mostly kills the old, the ill and the undernourished poor, and we do not really care whether such economically unproductive people live or die.” Politicians immediately backtracked and said they were just doing their duty by not lying to the people.
But were they? Or were they being influenced by neoliberal logic: financial value is the only value that matters? The fact that 8,000 children die per day from the virus of hunger, whose vaccine (food) is available, is part of this neoliberal equation. Inevitably, the fight against other deadly diseases will suffer, as we scramble to protect ourselves from the coronavirus.
A lot still needs to be done to combat this pandemic. Xenophobia and nationalism will not help. A lot also needs to be done to prepare for similar pandemics that will undoubtedly occur in the future: just a century back, in 1918, the ‘Spanish flu’ (which started among British or allied soldiers) killed 50 million. But nothing much will be done unless we see this as the first neoliberal virus pandemic in the world, and act accordingly.
Tabish Khair is an Indian novelist and academic who teaches in Denmark
Governments must aid people during this difficult phase and prepare for wider testing
India has responded to the spectre of large-scale transmission of the novel coronavirus and the unprecedented public health catastrophe it may bring by ordering a full national lockdown. The goal is to flatten the transmission curve and help a frayed health system cope with a large number of cases. Physical distancing of people, ensured through a suspension of rail and inter-State bus services, closure of public places, cessation of all non-essential activity and street-level monitoring, is the first order priority during a pandemic and the lockdown can ensure that. The options being used by States to enforce this are Section 144 of the Criminal Procedure Code, the Epidemic Diseases Act, 1897 and the Indian Penal Code. What must follow is the galvanising of governmental machinery to address essential requirements. This was certainly not in evidence on Sunday during the janata curfew, which saw near-total compliance, but culminated in noisy public celebrations. It was also marked by a last-minute scramble among migrant labour stuffing themselves into trains to return home ahead of the shutdown. Many hundreds more remained stranded in several cities, crowding termini, as train services were withdrawn. These hapless people, who must largely fend for themselves, have been potentially exposed to the pathogen; some may have unwittingly infected others. The week-long lockdown ahead cannot become a similar exercise in chaos, confusion and misery. As a war-like moment in the country’s history, it calls for massive preparation with all hands on deck to mitigate the impact on people, and to formulate a public health response for the period beyond the shutdown.
Governments have a duty to ensure that the most vulnerable classes, economically and socially, including the elderly, have access to essential articles including medicines, close to where they live. It should not be difficult to provide to them a package of staples to last a week using civil supplies departments, civic workers, and non-governmental organisations. Considering that about 37% of households depend on casual labour as their major source of income for rural and urban India, and nearly 55% have tenuous regular employment, as per Periodic Labour Force Survey data for 2017-18, it is essential for governments to ensure that they get subsistence wages for as long as restrictions last. Some States have already moved in that direction. Funds transfers during the containment phase of the pandemic, followed by a stimulus to sustain employment are necessary. But a bigger challenge stares India in the face: can it get a universally accessible testing system in place to prevent transmission when the lockdown is lifted? China, South Korea and Singapore, as WHO points out, adopted a strict shutdown, but used the breather to get a grip on infections by testing at the population level. This is the hard work that lies ahead, and it will test the mettle of India’s national and State governments.
In difficult terrain, security personnel end up second best despite the training
The attack by Maoist extremists in Chhattisgarh’s Sukma district on Saturday, that killed 17 security personnel and injured 15, including two critically, presents a grim picture on how poorly India continues to fare on this front. There was intelligence that Maoists were going to assemble at Elmagunda village, which is dominated by the Peoples’ Liberation Guerrilla Army Battalion 1. Accordingly, security forces, comprising District Reserve Guards, Special Task Force, numbering 500, were dispatched into the forests to deal with the emergent situation. In retrospect, despite the intelligence, they did not encounter even one Maoist and began their journey back, in two groups, to their camps at Chintagufa and Burkapal, not more than six kilometres apart as the crow flies. The smaller contingent, numbering 100, headed to Burkapal, encountered fire six kilometres from the base camp and they duly returned it. The Maoists retreated and fired again and the security forces fired and followed till they had been lured into an open area in hilly terrain where the Maoists, some 350 of them, had the advantage of numbers, line of fire as well as height, a classic ambush. The Maoists then picked off their targets. The other much larger group, not more than three kilometres away, also came under diversionary fire that kept them pinned down.
The real story is still to emerge, but it is odd that in the battle that began about noon and lasted five-and-a-half daylight hours, reinforcements could not be sent to hapless personnel. It can be surmised that at the very least those who got ambushed did not know the terrain or the tactics enough, although that should not be the case considering the composition of the DRG. It is yet to be convincingly explained how as many as 400 personnel so near did not rush to aid their uniformed brethren. Was it a leadership or assessment issue? Was there a communication breakdown? Was the initial intelligence properly vetted or was it bait? Was this entire operation properly supervised? It is remarkable, too, that helicopters were able to evacuate the wounded afterwards. So complete was the rout that even though the security forces said they took down some Maoists, there is not much physical evidence to support this claim. It is also significant that as many as 13 of the dead security forces were locals from Sukma district, many of them surrendered Maoists. And unfortunate that many of them bled to death waiting for assistance. There is a lot to answer for but it seems that despite dedicated training the security forces get for just these eventualities, the Maoists are able to improvise and come out on top, smarter, nimbler, and many steps ahead.
There is no doubt that the poor people will find it difficult to stay afloat during the pandemic (Editorial page, “The perils of an all-out lockdown”, March 23), but one should not forget that to survive in this double crisis, the government has chosen the lesser evil. If an all-out lockdown was not imposed then the situation would have been too serious to control. One can imagine the gravity of situation just by looking at what is happening in Italy and Iran. Of course, it is the responsibility of government to ensure that the poor do not struggle, but others can help too — the rich, the industrialist class and religious institutions should come forward to help at this crucial juncture.
There is no denying the fact that as the country is veering towards total lockdowns as a strategy, the not-so-privileged sections who need a daily income are going to face an uphill task to eke out a living. It was expected that when the Prime Minister sought the cooperation of the people for a janata curfew, he would also spell out the ways and means of taking care of the downtrodden who constitute the majority. Now that the people had risen to the occasion and made the curfew a resounding success, it is also time for the government to reciprocate and utilise existing social security schemes to extend the required economic assistance. Along with the scare of a virus, the poor people should not be left to stare at the prospect of living on an empty stomach. The corporate industry may cry out for bailout packages, but the priority should be to look after the interests of daily-wage earners who have no one else bu the government to look to for relief.
Change and how
The ugliness of the Congress government being toppled in Madhya Pradesh and a BJP government being installed in its place is nothing but stealing the mandate of the people. That the party is expanding its power base State by State, but by adopting all crooked manoeuvres possible and with utter disregard for democratic norms is distressing.
Do not the tall leaders in the party have any shame or conscience by openly indulging in very questionable methods to meet political ends? When will the Election Commission of India put an end to this? And when the higher judiciary call out this misuse of power? If such political absurdities continue unchecked, why hold elections at all? It may not be far-fetched to say that the government of the day aims to have absolute majority in the Rajya Sabha and Lok Sabha to enjoy authoritarian rule. It is for the judiciary to uphold constitutional values and save the country.
Ramanathapuram, Tamil Nadu