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Comment on Coronavirus and Central Government Relief Package By Prof. K.R. Shyam Sundar, XLRI-Xavier School of Management, Jamshedpur

The national lockdown and closure of regional borders due to Covid-19 have affected near-universally non-essential economic activities primarily in urban and neighbourhood areas which means loss of or reduction in incomes to and potential job-losses of informal and precarious workers. The Finance Ministry has announced Pradhan Mantri Garib Kalyan Package (PMGKP). The biggest positive measure is substantial food security to crores of people covering both urban and rural areas.

The ex-gratia cash transfer of ₹500 could have been extended to all PMJDY account holders instead of women account-holders only which would have increased the family income significantly. The EPF subsidy of 12% each covering employers’ and workers’ contributions concerning businesses employing less than 100 workers and allowing non-recoverable advances from EPF will have little impact as non-operating businesses especially the MSMEs will require stronger forms of assistance and subsidies to be able to retain workers and pay them their wages. 

Any form of credit and fiscal assistance to these firms should be linked to employment and wage payment conditions and a temporary wage subsidy to them will be welcome. Securing advances from EPF on Pandemic grounds will encourage uncalled for withdrawals and erode future social security. Apart from the fact that the EPF measures will most likely leave out millions of informal workers (contract, casual and naka-workers, etc.) in the urban areas there is nothing in the PMGKP which will provide even a modicum of money in the pockets of these workers. 

The advice to use the Construction workers’ Cess is fine but again it is using “their” money for their relief, though this means ₹52,000 crores locked in the Cess Fund will finally be used for them! However, the disbursement of funds will much depend on the extent of live registration of the 54 million constructions workers. Several other measures like collateral-free enhanced ceiling will have helped better the SHGs if these are provided free of interest as has been done in Maharashtra and Odisha. Again, apart from offering hefty insurance cover for “accidents” (what do this cover?) to exposed health workers temporary higher wages (say hardship allowance) for ASHA and other lowly paid health workers are necessary and measures to widening and strengthening of health infrastructure would have been reassuring. 

The slightly higher MNREGA wage rate will offer marginal relief as historically 45-50 days of work on average have been offered to rural households and it is much less than the minimum wages for agricultural workers; however, this might be welcome to offer relatively higher wage work of 100 days to return migrants. The overall sense is that apart from universal food security, the reliefs are partial and offer little to the millions of urban informal workers who are worst affected by the lockdown. Finally, the relief measures from different realms are interconnected – say prospects of payment of wages to workers for most MSMEs will also mean reliefs for them – and a comprehensive, multi-pronged, simultaneous relief measures would have been announced. 

Further, the government must have the vision to not only address short-termist concerns but also plan for revival of and post-Corona economy.

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