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Mainstream, VOL LVIII No 23, New Delhi, May 23, 2020

Relief in the Package

Saturday 23 May 2020


by Suranjita Ray

It is perturbing that it took a pandemic to realise that ‘right to life’ and ‘right to livelihood’ are not dichotomous. Though policy makers are struggling to balance the priorities of public health and economic well-being during a pandemic and nationwide lockdown, reports across the country reveal extreme hardships for a large segment of society whose survival is under threat. A big challenge unparalleled in several decades is the loss of resources of livelihood in the cities that compelled millions of people, in particular workers in the informal sector, migrant workers, daily wagers, vendors, and ragpickers to return to their villages for survival.

Though success stories of several flagship programmes such as National Health Mission (NHM), Right To Education (RTE), National Food Security Act (NFSA), Pradhan Mantri Awaas Yojna (PMAY) and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) have been highlighted to legitimise an inclusive, equitable and non-discriminatory state, COVID-19 has exposed the stark reality of deprivation and exclusion of large sections of society. The present crisis reveals lack of social security measures and safety nets for large majority of people, who have borne the brunt of distress. Despite a range of measures announced by the Central as well as State Governments to alleviate hardships of the poor, destitute and vulnerable groups, they continue to struggle to survive even after more than 50 days of lockdown.
It is important to provide both immediate relief to the deprived and vulnerable groups whose survival is under threat along with substantial and long-term measures to recover the economy and secure livelihood. While the Prime Minister’s proclamation to use the crisis as an opportunity to make India self-reliant is an important intervention, it is significant to provide monetary help to the deprived, starved and hungry. Cash transfers to bottom half of the population is the most urgent and immediate need. In order to stimulate demand, noted economists across the world suggest that money has to be put in the hands of the poor. It is crucial to repair the demand chain that is broken. Many measures announced by the government to provide liquidity as incentives to produce operate on the supply side. This will not bring in immediate relief in distress. The welfare state must provide immediate relief to rescue the deprived and destitute from distress and save their lives and livelihoods which alone can reinstate the trust of the people.

For the Poor and Deprived

The first relief package of Rs 1.7 lakh crore announced under Pradhan Mantri Garib Kalyan Yojna (PMGKY) on 26 March 2020 was to combat the economic impact of COVID-19 on the poor. Promising that ‘No One Will Go Hungry’, the Finance Minister announced relief package for three months for the poor and worst affected. It is assumed that an increased entitlement of 5 kg of wheat/rice per person per month and 1 kg of pulses for a family free of cost supplied through Public Distribution System (PDS) for next three months will benefit two-third of population covered under NFSA. Some of the important measures to provide relief to the needy include Direct Benefit Transfers (DBT) worth Rs. 1000 per month to the aged, disabled and widows, Rs. 500 per month to 20 crore women under Pradhan Mantri Jan Dhan Yojna (PMJDY), and free distribution of LPG gas cylinders to 8 crore poor families for next three months. Under the existing Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), Rs. 2000 as the first instalment will be paid to 8.7 core farmers to benefit them immediately.

Since the economic shutdown has the biggest blow on micro, small and medium enterprises (MSMEs), which employ 40 per cent of the workforce, suggestions to revive the MSMEs focus on increasing credit guarantee, providing liquidity, ensuring adequate capital and establishing wage protection package. The second relief package announced by Prime Minister on 12 May 2020 as Atma Nirbhar Bharat Abhiyan (Self-reliant India Campaign), is a stimulus package to resume economic activity and promises to make India self-reliant. The recovery package worth Rs 20 lakh crore, which the government claims is around 10 per cent of GDP, focuses on land, labour, liquidity and laws catering to various sections including cottage industries, MSMEs, labourers, and middle class among others. It includes the ongoing PMGKY to support the poor and vulnerable groups during the pandemic as well as several measures taken by the Reserve Bank of India (RBI) to improve liquidity which is worth 5.24 lakh crore since 27 March. The list of reforms in the economic package announced over the past few days has several notable features pertaining to agriculture and industry, in particular investment and production, though all of them are not for COVID-19 relief.

The first tranche of economic relief plan unveiled by the Finance Minister focusses on policy reforms that will make India’s economy self-reliant and less dependent on world economy. A mega reform to infuse liquidity aims to alleviate distress in the MSMEs which employs 11 crore people, many of whom are the migrant workers. The government assumes that redefining MSMEs beyond their turnover will do away with the fear of MSMEs losing the benefits due to growth in their size. Collateral free loan scheme for business announced especially to MSMEs will enable them to borrow without any fresh collateral and guarantee fee against loans worth Rs 3 lakh crore. The bankers will be willing to lend when loans are backed by government guarantees and this will kickstart credit deployment. Boosting liquidity will incentivise MSMEs and empower the entrepreneurs and strengthen their competitive spirit.

The second tranche announced includes Rs 3,500 crore to provide free foodgrains to migrant workers for next 2 months. This aims at benefiting the non-card holders by extending PMGKY announced on 26 March to benefit 80 crore people with ration cards. The ration card portability scheme, ‘One Nation One Ration Card’, will allow 67 crore beneficiaries in 23 connected states to access subsidised food by August 2020. It will cover all the beneficiaries by March 2021. The scheme will benefit the migrant workers away from their native villages. Some of the important measures announced include an extension of credit facilities for urban housing and an affordable rental housing for urban poor, relief worth Rs 1500 crore to small business through an interest subversion scheme, and credit facilities to street vendors worth Rs 10,000 as initial working capital.
The third tranche announced is dedicated to agriculture and allied activities. A central law will be enacted to permit barrier free inter-state trade and e-trading of farm commodities and will ensure a legal framework for contract farming. Rs 1.5 lakh crore will be spend to build farmgate infrastructure and support logistics needs for food processing, animal husbandry, fish workers, livestock farmers, vegetable growers, horticulture, bee keepers and related activities. Primary agriculture cooperative societies, farmer producer organisations, agriculture entrepreneurs and start-ups will be financed to develop cold storage and other post-harvest management infrastructure at the farm gate and aggregation points. The need to amend Essential Commodities Act, 1955, to deregulate the sale of six types of agricultural produce, including cereals, oilseeds, edible oil, pulses, onions and potatoes, was also announced.

The fourth tranche focused on Industrial Reforms to provide necessary boost for privatisation and growth. Some of the measures announced are to introduce commercial mining in coal sector, liberalisation of the mineral sector, encouraging private involvement in space and energy projects, hiking foreign direct investment up to 74 per cent, reducing imports to build self-reliance in defence, easing restrictions on utilisation of airspace and reforms in atomic energy and space.

The fifth and final tranche announced 65 per cent hike over the 2020-21 Budget outlay of Rs. 61,500 crore for MGNREGA. In addition, states have been allowed to raise their borrowing limit from 3 per cent to 5 per cent of their GDP. However, the increasing borrowings are conditional to implementing specific reforms related to ration portability, ease of doing business, power distribution and urban local bodies.

Though the economic package claims to revive the economy and secure livelihood for migrant labour, small and marginal farmers, and urban poor, it has little to provide as immediate relief. Noted economists, policy analysts and opposition leaders suggest one-time cash transfer to migrant labourers and vulnerable sections as an urgent measure to deal with the widespread distress. Since no money is put in the hands of the poor, there is no instant or direct benefit transfer particularly to the migrant workers battling to survive. Though a greater challenge for policy makers is to address the conditions which generate and perpetuate poverty, deprivation and hunger for certain sections of society irrespective of the levels of economic growth, food production, and development, the most urgent need in the present crisis is to provide immediate relief to the destitute and deprived. While Direct Benefit Transfers (DBT) is not an absolute good and one-time payment will have little impact unless the systemic deprivations are addressed which not only persist but also continue to increase, the immediate relief from distress in a pandemic and complete lockdown is to put money in the hands of the needy.

Major Concerns

Some of the lessons from past experiences need to be addressed. The assumption that an extra ration allocated from April to June in the PMGKY will provide relief to the poor, might not be true due to widespread leakages and corruption in the PDS across the country. Only a few states such as Kerala, Tamil Nadu, Andhra Pradesh, Himachal Pradesh, Rajasthan, Chhattisgarh and Odisha have better functioning PDS with the decentralised initiatives. In fact, states that have moved towards universal PDS have done better in increasing off-takes and reducing leakages. Violations of the provisions in NFSA to provide Food Security Allowance in case of non-supply of foodgrains, periodic social audit of the PDS and grievance redressal mechanism through District Redressal Grievance Officer (DRGO) and Vigilance Committee are reported across the states. Moreover, 100 million people are excluded from access to food under the NFSA as it is based on 2011 Census.

In a petition filed in the Delhi High Court, Delhi Rozi Roti Adhikar Abhiyaan (DRRAA) has sought to implement the grievance redressal and accountability mechanism under the NFSA. It has demanded publicity of details of PDS ration shops to ensure transparency. Their study finds that 21 of the 61 ration shops were closed between 1st and 4th of May. While 5 out of 20 schools to distribute ration were shut, schools without e-coupons to distribute ration had also turned up to avail ration. In most of the schools notices displaying the entitlements on e-coupons could not be located (DRRAA Report, 5 May 2020). Though the Centre is providing double ration as COVID-19 relief and the online deliver of stocks to the ration shops exists, beneficiaries of Antyodaya Anna Yojna have not received any additional grains. In several areas in Delhi where people are assumed to be well informed about the schemes, majority of the beneficiaries stated that they are unaware of the detail of relief schemes. They have been cheated of an extra 5 kgs of grains per person. No data is available for public scrutiny on the distribution of foodgrains to specific ration card holders. Many have also been deprived of the kit with cooking oil, masala powders, soap, chole and sugar under Mukhya Mantri Corona Sahayta Yojna. Since many children are deprived of their only nutritious meal through Mid-Day Meals programmes as schools are closed during the lockdown, suggestions to deliver dry ration to the households with school going children should be implemented.

In Jharkhand and Bihar, FIRs and complaints have been logged regarding shutting down of PDS shops/outlets during the working hours and denial of access to food grains to the needy during lockdown. Huge number of cases are reported regarding the violations of announcements by the government in Jharkhand to double the ration to 70 kg rice for card holders and 10 kg of rice to households whose applications for ration card are pending. In fact, licences of several dealers have been cancelled due to complaints against violations in implementation of various food programmes under NFSA. The Food Commission in Jharkhand has also recommended to follow the successful model of distribution of ration by Panchayats/Gram Panchayats in Chhattisgarh and Odisha.

Though free supply of 5 Kg of grains and 1 kg Chana per person for 2 months to migrant workers without a ration card and outside NFSA is a positive step, however, it will have logistics issues and might result in shortage of supplies in PDS outlets. The One Nation One Ration Card scheme is scheduled to be completed only by March 2021. The affordable rental housing scheme under PMIAY will also be implemented only over a period of time. No income support has been given to 5 million street vendors though they might have easy access to credit facility.

In fact, bulk of the proposals in the economic package are for providing loans and liquidity supports that will be implemented over a longer period. The relief measures to boost liquidity to various segments, ensuring flow of credit to MSMEs, is only an assumption. Analysts argue that banks may not still be forthcoming to lend to lower rated companies as the current risk aversion matters. They argue that when demand is down, any move to provide liquidity will not help as people will be unwilling to take credit at this time. Therefore, putting cash in people’s pocket would have been a better approach.

While Andhra Pradesh, Rajasthan, Odisha, Chhattisgarh have become the leading states to implement MGNREGA with several lakhs of registered workers, several studies at the micro level reveal the hindrances and corrupt practices in implementing MGNREGA. While an increase in the wages of the unskilled workers under MGNREGA by 16 per cent in Maharashtra, 13 per cent in Bihar, Jharkhand and Gujarat, 12 per cent in Andhra Pradesh, Telangana and Tamil Nadu and by 11 per cent in Rajasthan is a positive step in ensuring social security, failure to provide work to all those who demand, remains a reality at the grassroots. The government assumes that Rs. 20 as increased wage will ensure an additional Rs. 2000 per household to all 13.65 crore job card holders who will get 100 days wage employment but studies find that only 8.22 crore job cards are active. Data shows that only 14 crore person days work have been provided in April-May 2020 unlike 64 crore person days in April- May 2019. Only 34 lakh households were provided work in April 2020 as compared to 1.7 crore in April of 2019.

With the migrant workers returning to their villages, the demand for MGNREGA works will go up in the coming months as it remains the only source of employment and the main source of livelihood in rural areas. The decision of the government to extend work opportunities under MGNREGA to the monsoon season is important as it will provide income to the people during the lean season. The suggestion to do away with the limit of 100-day wage work per household is valid in a situation of massive unemployment.
Though increasing allocation of Rs 40,000 crore to MGNREGA is in the right direction as it remains an important source of livelihood in rural areas, the number of work days should have increased. The centre has cleared all pending payments of beneficiaries under the MGNREGA, but the onus of compensating the unemployed with an unemployment allowance lies on the state governments. Since the states account for 40 per cent of MGNREGA expenditure, it is important that they are willing to spend more as the budget for it has increased by two-third.

As per the provision in the Act, the focus has been on creating permanent assets for the villagers through construction of houses under Prime Minister’s Awas Yojana, ponds, cattle sheds, and fencing and levelling of agricultural fields. Besides agricultural and construction works, work in rural enterprises and care activities also need to be included under expanded MGNREGA to revive the economy and support livelihoods (Ghosh, Patnaik and Mander, 2020:6). Since Adivasis are worst sufferers, the MGNREGA projects can be linked for the collection of minor forest produce which will be a labour subsidy and rescue them from distress (see also Karat, 2020: 6). The recommendations to expand it into public works programme to build much needed hospitals, clinics and rural roads and other infrastructure by integrating MGNREGA with Pradhan Mantri Gram Sadak Yojna and the roads and bridges programme are important.

The proposal drafted by group of Ministers on employment and skill development suggests to merge MGNREGA with skill development programmes to create wage subsidy programme. It is argued that though MGNREGA is about unskilled works, extending MGNREGA amount to companies as wage subsidy for Small and Medium-sized Enterprise will create a local employment wave. The proposal also suggests that every migrant worker should be automatically included in Pradhan Mantri Jan Arogya Yojna and have access to cashless medical facilities in the place of work. In addition, it proposes a Migrant Welfare Fund with equal contribution from the worker, employer and government which can be utilised for health insurance and unemployment allowance in case of shifting jobs.

A major concern across political ideologies is to strengthen the public health sector. The recommendations in the report of the High-Level Expert Group to the Planning Commission in 2011 on strong public-sector led Universal Health Coverage (UHC) with contracted private sector as per need and emergency are important. While the package promises increased public expenditure on the health sector including infectious disease hospital blocks in every district and public laboratories in every block, no specific financial outlay has been mentioned. It is essential to take cognizance of the vigorous role of Accredited Social Health Activists (ASHA) who mediate between the state and the people by looking after basic health needs of the people particularly of women who are on the family way. At present, ASHA are playing an important role by counselling regarding the provision for the essential services such as nutrition and medicines, and the use of masks and social distancing. They need training facilities and better salaries.

The government will require an extension of the relief measures for a longer period to prevent human capital deprivation in future as well as ensure social and economic security (see also Rao, 2020: 7). A monetary relief package is most urgent given the gravity of the distress and devastation that large sections of society are experiencing. It is pertinent to take short-term measures in terms of providing foodgrains and cash as immediate relief from distress, as well as long-term measures to sustain livelihood resources by bringing back the demand chain that is broken.

Sustaining Lives and Livelihood Resources

Policy analysts suggest that since the Food Corporation of India had 77 million tons of grains in March 2020, higher than ever during this usual time of the year, and more than three times the ‘buffer stock norms’, which is likely to grow with additional 40 million tonnes from Ravi crops, the government should give away the existing stock through PDS even to those who are excluded from PDS rolls. At a time of national emergency, the bottom half of the population (13 crore families - the poorest of the poor) should be given free foodgrains to prevent hunger and starvation. Though strengthening of PDS is significant, it is equally important to ensure that families have cash to buy the grains and pulses supplied through PDS. The actual cash transfer of Rs 500 to PMJDY is inadequate given the gravity of the crisis. Suggestions to prioritise universal transfers of foodgrains worth 10 kg per month for at least 6 months and cash worth Rs 7000/- per month for at least 3 months to all those who need them are important (Ghosh, Patnaik and Mander, 2020: 9; 2020: 6). The poor also need cash to buy essential things such as vegetables, cooking oil, spices and milk, which are not covered under PDS (see also Damodaran, 2020: 12). Jean Dreze and Reetika Khera suggest that cash transfers to women’s PMJDY accounts are less reliable than transfers to job card holders under MGNREGA, as studies show larger inclusion errors in JDY and less than half of poor adult women have a PMJDY account (Dreze and Khera, 2020: 6).

Though in the present situation it is urgent to provide immediate cash compensation to the farmers to rescue them from distress, there are other impeding problems with vicious impact leading to a crisis. Even farmers receiving Rs. 6000 under the PM-KISAN scheme will not benefit much as they face shortages of inputs, seeds, fertilisers, labour, marketing facilities, remunerative prices and policies for procurement and distribution. Extension of loans of Rs 2 lakh crore to 2.5 crore farmers through Kisan Credit Cards will provide no immediate relief to farmers who have incurred huge losses due to distress sale of wheat far below the Minimum Support Price. Farmers who grew vegetables suffered huge loss due to lack of transport, labour and buyers during the lockdown. While the economic stimulus package focuses on the long term agriculture infrastructure to produce, it has no relief measures for the landless labourers.

Most of the measures in the package provide loans and credit facilities and are an extension of existing schemes of the proposed expenditure budget for FY2020-21. Though the Finance Minister argues that industrial reforms will increase production leading to an increase in employment, analysts across ideologies criticise the measures announced to liberalise the norms and increase privatisation as they are less of a fiscal stimulus and have little to contribute in either providing relief or economic recovery from a crisis.

A range of suggestions by renowned economists, Thomas Piketty, Amartya Sen, Jean Dreze, Raghuram Rajan, Kaushik Basu, and Abhijit Banerjee are important and must be considered by the policy makers. Abhijit Banerjee insists that a stimulus package to absorb the shock of a prolonged lockdown in particular for the migrant workers and MSMEs must include putting money in the hands of the people. This will avert debt and revive demand. Money in the hands of bottom 60 per cent of the population will have a stimulus effect as it will kickstart the economy. He believes that spending is the easiest way to revive the economy as it will have the usual Keynesian chain reaction (cited in Phukan, 2020 : 1).

A series of measures combining a basic income, right to work, shelter, food, health and education to ensure security and safety net need to be prioritised, lest it will cause more deaths than the pandemic itself (see also Basu, 2020: 11). Krishna Kumar critiques the development model rooted in the structural imbalance and growing regional disparities between the rural and urban areas. He suggests a revisit of policy strategies in 1990s particularly the public private partnership (PPP) which focused on developing urban areas in terms of livelihood opportunities and infrastructure that resulted in migration from rural areas to the cities (Kumar, 2020: 6). Rethinking an undermining agrarian economy and policies that did not focus on investment in public health and education in the villages is therefore vital.

It is important to revive universal PDS and monitor its implementation. Detail information of the work, names of workers and the wages paid under MGNREGA should be recorded in the muster rolls and should be available at the work sites to ensure public transparency. With 90 per cent of the workforce in the informal sector, without social security and protection measures, an utmost need is to protect labour rights. But, the irony is that labour protection laws are being done away in the BJP-led states of Uttar Pradesh, Madhya Pradesh and Gujarat. Suspension of labour laws proposed by these states on the pretext of encouraging employment by attracting investment to restart economic activity will result in further deprivation of workers from social security and protection.

In the battle against the social and economic impact of COVID-19, an effective health system to benefit the common people needs to be prioritised. The public health standard should include basic minimum food, drinking water, housing, minimum wages, PDS, primary health care, transparency of utilization of funds, decentralisation of decision making, improving the Community Health Centres, planning the partnership with Civil Society Organisations, NGOs, and community monitoring to develop capacity building approach.

Much depends on the efficiencies of delivery mechanisms in the local administration as well as community participation. Restructuring, reorganizing and regulating of the delivery services need radical changes and a strong political will. The government has also appealed to all the local Non-Government Organisations and Voluntary Organisations to participate actively in the delivery of services. The NGO Darpan Platform under which more than 67,000 NGOs registered with NITI Ayog for greater partnership between the government and voluntary sector in order to foster transparency, efficiency and accountability should be used to deliver welfare services in particular distribution of cooked meals. Suggestions to involve NGOs, local communities and Panchayati Raj Institutions (PRIs) in reviving the economy as well as livelihood resources are crucial.

While PRIs and local institutions in several places are playing a vital role in providing both cooked meals and foodgrains to people, their role has to be strengthened in formulating the social welfare policies. The Prime Minister’s address to the Gram Panchayats across the country on the occasion of the National Panchayati Raj Day on 24 April 2020, and the launch of e-Gram Sabha Portal, Mobile App and Swamitva Scheme to alleviate poverty in rural areas is a big initiative to revive participatory approach of the government to include local institutions at the grassroots in the policy making process.
Amartya Sen argues that unlike a top-down model, dealing with a social calamity needs participatory governance and alert public discussion (Sen, 2020: 8). He explicates that it is important to prioritise possible protective arrangements such as devoting more public funds for helping the poor through institutional mechanisms to deliver services that secure basic needs such as food, health and employment, which get comparatively small allocation in the Central Budget.

The actual command over food, employment, education and health care that different sections of the population can exercise depends on a set of social, cultural, economic, political, and legal factors. Announcements of mega reforms in the economic package can neither be valued for its sake nor understood in abstraction. They need to be analysed in terms of implementation, and both short-term as well as long term impacts in specific contexts. It is important to understand the present socio-economic distress and insecurity from the vantage point of the poor, deprived, disentitled and disadvantaged people, in particular the migrant workers, to address their concerns. The welfare state must reach out to the ordinary people during a crisis which is unprecedented.

Suranjita Ray, teaches Political Science in Daulat Ram College, University of Delhi. Email: suranjitaray_66[at]yahoo.co.in

References :

Basu, Kaushik (2020), ‘Let’s Use follower’s Advantage’ in The Indian Express, 27 March, p 11.
Damodaran, Harish (2020) ‘Unfolding The Garib Kalyan Package’ in The Indian Express 27 March, p 12.
Dreze, Jean and Reetika Khera (2020) ‘Getting Cash Transfers out of a JAM’ in The Hindu, 13 May, p 6.
Ghosh, Jayati, Prabhat Patnaik and Harsh Mander (2020) ‘Humanitarian Emergency’ in The Indian Express, 27 April, p 9.
…………..(2020) ‘A Plan to Revive a Broken Economy’ in The Hindu , 14 May, p 6.
Karat, Brinda (2020), ‘Playing out Live, a Narrative of Discrimination’ in The Hindu , 12 May. p 6.
Kumar, Krishna (2020), ‘The Village is still Relevant’ in The Hindu , 23 April. p 6.
Phukan, Sandeep (2020) ‘India Needs a big Stimulus Package’ in The Hindu, 6 May, p 1.
Rao, Krishna (2020) ‘Protecting the Poor from becoming Poorer’ in The Hindu, 27 April, p 7.
Sen, Amartya (2020) ‘Listening as Governance’ in The Indian Express, 8 April, p 8.

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