The central government on Thursday announced a relief package for the “poorest of the poor” hit hard by the loss of jobs and income as a result of the coronavirus outbreak, but stopped short of announcing a lump sum amount as cash transfer into the accounts of the needy.
Finance minister Nirmala Sitharaman gave out details of how this Rs 1.7 lakh crore package would help nine segments of the poor and vulnerable, but did not explain how such a package will be funded. “No one will go hungry,” she assured, adding that "other concerns" would be "considered separately".
She also swept aside questions on whether this package will create further pressure on an already tough fiscal deficit target since government revenues are already squeezed. As it was aimed at the lowest sections of society, the latest relief package does not address the common middle class woes of looming EMIs as a new month approaches.
All they got from the FM was a promise to slowly address their needs in the coming weeks. She has already provided some concessions in terms of tax compliance deadlines for the middle class.
From the announcements, it is clear that the intention of the government is to first help the weakest sections of society when businesses, large and small, and the middle class are clamouring for mega relief measures, suited to their needs, due to the significant economic impact of Covid-19 pandemic. Whether the government provides further relief to these sections of society remains to be seen.
Below is a point-by-point rundown on what the package includes, the positives and the shortcomings, the questions that arise from it and the challenges that the government will face in fulfilling its commitments.
1. Rs 50 lakh per person insurance cover for health and sanitation workers. This should benefit about 20 lakh such workers. It is not clear how such insurance would be provided, whether private sector insurance providers would be roped in and how much will the premium cost the government.
2. Pradhan Mantri Gareeb Kalyan Anna Yojana: About 80 crore poor people, who are already entitled to get five kg wheat or rice every month, will be get double this entitlement each month for the next three months. Additionally, a kg of pulse (according to regional preference) would be provided per family.
Agricultural experts point out that while the intention may be good, the actual implementation of this scheme is fraught with practical difficulties. The government’s godowns are stuffed with grain so availability wouldn’t be an issue but the huge logistics involved in doubling the grain entitlement would mean additional grain can reach the beneficiaries well after three weeks.
If the intention was to help the poor tide over the 21-day lockdown period without going hungry, then additional foodgrain allocation wouldn’t solve this problem.
3. First instalment of PM KISAN, the direct cash transfer scheme for farmers, to be disbursed immediately. This would mean Rs 2,000 to be front loaded or advanced for the beneficiaries. Again, this doesn’t really enhance the cash in hand for the farmers, merely allows the 8.3 crore beneficiaries to get a part of the allocation sooner.
4. MGNREGA wages to be increased from Rs 182 to Rs 202 per day. This will benefit five crore families by providing an additional around Rs 2,000 each over three months. Again, experts have questioned this relief, since works against which MNREGA wages are paid are already hard to come by.
5. Women Jan Dhan Account Holders will get an ex-gratia amount of Rs 500 per month in cash transfers for the next 3 months. The government says this step will benefit 20.5 crore women. A welcome initiative though the amount involved is too meagre to make a significant difference to a large section of the deprived.
6. Elderly, widows, disabled to get Rs 1000. This will be given in two instalments over the next three months to three crore beneficiaries. Once again, the amount is too meagre for it to make a significant difference to a large section of the deprived.
7. Free gas cylinders: the 8.3 crore BPL Ujjwala Yojana beneficiaries will be given free cylinders for the next three months. Unless these families have grain and vegetables to cook, offering free cooking gas is hardly going to solve matters.
8. Collateral-free loans to 63 lakh Women Self-Help Groups to be doubled from Rs 10 lakh to Rs 20 lakh. The FM said this will money immediately in the hands of seven crore households.
9. For the organized sector, government said it will pay the EPF contribution of both of the employer and employee (12% each) for the next 3 months. This is only for those establishments which have up to 100 employees, where 90% of employees are earning less than Rs 15,000 per month. The EPF scheme regulation will be amended to allow non-refundable advance of up to 75% of the amount or 3 months of wages, whichever is lower. This should affect 4.8 crore workers.
10. For construction workers, the Centre has asked state governments to use the existing welfare fund for building and construction workers which has a corpus of Rs 31,000 crore. It is not clear how much comes to the share of each state and how many states will acquiesce to this diktat from the Centre.
The government has neither explained the source of this Rs 1.7 lakh crore package nor can it ensure that the poor get immediate relief through many of the measures announced.
The critical need to provide food and shelter to migrant workers, for example, who are trudging along on foot for thousands of kilometres to reach home amid a nationwide lockdown, may have been better addressed through a cash transfer into at least those accounts which are linked under the Direct Benefit Transfer Scheme.
As former agriculture secretary Siraj Hussain pointed out, even for providing additional foodgrain through PDS systems, the movement of grain from godowns to fair price shops would take weeks.
Congress president Sonia Gandhi had, earlier today, sought Rs 7500 cash transfer to the Jan Dhan accounts and 10 kg of free grain to the poor amid the ongoing 21-day lockdown. Although only the latter demand was fulfilled, the package received a rare thumbs up from Rahul Gandhi, who called it the "first step in the right direction" in a tweet.
The author is a senior journalist. Views expressed are personal.