Searching for Solace in Sitharaman's Stimulus

Raman Swamy

There are certain key elements in the Modi government’s stimulus package to combat the adverse economic impact of Coronavirus that need to be amplified and clarified. 

Within minutes of the basket of welfare schemes and financial allocations beig announced by Finance Minister Nirmala Sitharaman on Thursday, stakeholder organisations were quick to spot some apparent anomalies that require explanation in order to clear doubts and avoid confusion.

For instance, one of Sitharaman’s most impactful announcements was the immediate release of the First Instalment of PM-KISAN cash-transfer.  The Finance Minister stated that 8.6 crore farmers would get instant benefit.

However, experts and activists in the farm sector have raised a query -  when the PM-KISAN scheme (Pradhan Mantri Kisan Samman Nidhi) had been flagged a year ago, it had been officially claimed that the number of beneficiaries would be around 14.5 crore.  The question that now needs to be clarified is why the Minister has mentioned a much lower number of beneficiaries in the coronavirus context and whether there is a reason why about 6 crore farmers are seemingly being left out of the ambit.

Farm organisations have not only sought an explanation but also issued an appeal that in view of the unprecedented level of economic distress existing since much before the Corona threat,  it would give a big boost to the rural poor if all the three instalments of this year are released immediately in a lump sum, instead of just one instalment.

Farmer bodies have pointed out that the implementation of PM-KISAN has been dogged with delays and disappointments and a large number of intended beneficiaries have invariably been left out.  

The whole purpose of the scheme was to provide income support to all landholding farmers' families in the country - with the stated objective of supplementing their financial needs for procuring various inputs for farm and agriculture related activities as well as for personal domestic needs.  

Under the Scheme, it had been solemnly promised that the entire financial liability towards transfer of benefits to targeted beneficiaries would be borne entirely by the central government.  

Even otherwise, the scope of the PM-KISAN had been officially broadened to include all such rural households.  Initially, when the scheme was launched in February 2019, its benefits were admissible only to Small & Marginal Farmers (SMF) families, with combined landholding upto 2 hectare.  However, the scheme was formally revised in June last year and its scope was enlarged and extended to all farmer families irrespective of the size of their landholdings. 

Unfortunately, land holding continues to be the sole criterion to avail of the benefits under the PM-KISAN Scheme.  But, as organisations like the All India Kisan Sabha and the All India Agricultural Workers Union, have pointed out, now the Finance Minister has declared that such cash transfers would be expedited to provide much needed relief in the wake of the crippling effect of the coronavirus lockdown, thre is a dire necessity and indeed a moral obligation to ensure that its benefit reaches all agricultural households including tenant farmers and landless agricultural workers.

Moreover,  Adivasis and Traditional Forest Dwellers whose incomes will evaporate during lockdown because Minor Forest Produce cannot be collected or marketed in the present paralysed environment, should also not be excluded under any pretext or technicality.  The same principle should apply to Rural Artisans who are among the worst sufferers in terms of income loss due to pandemic hit economic conditions and who are in dire straits and need to be compensated in order to survive. 

It needs to be pointed out that the Modi government’s package is an opportunity to rise above the general perception that till now the BJP regime’s concerns have been largely to cater to its political base comprising of big corporates, traders and business community,  the urban elite and the urban middle classes, with the vast rural population lower down in the priority.   

The less perceived reality is that rural India was impoverished to a greater extent by the impact of draconian measures like demonetization in 2016 and the hasty and inept implementation of GST.  The downslide in the country’s productivity due to these and other policies virtually shattered the rural economy - the latest economic paralysis in the wake of fears of a horrendous coronavirus outbreak and the sudden imposition of national lockdown has come as a double whammy and a kick in the stomach of the farmers and agricultural sector.    

Time alone will tell whether such a severe freeze in national activity is justified.  A feeling is growing that even though the virus has been declared a global pandemic and frightening reports are coming in of mass contagion in Europe, US and Asia,  the statistics regarding number of infected and deaths in India is still relatively low. 

The entire exercise of taking unprecedented levels of precautions is based on the warnings of medical experts that social distancing and complete halt to all normal economic activity is the only way to “flatten the curve” of mass contagion and mass fatalities. 

Even if this is accepted at face value, the ground reality in a country of India’s geographical size, population density and wide disparities in living conditions and income levels makes it well nigh impossible to ensure total lockdown as was evidently effective in China.  The first two days of the 21-day lockdown have provided enough evidence that preparations for a drastic shutdown were woefully inadequate – reports of chaos and cruelty are pouring in despite the captive media’s attempt to suppress news of lakhs of stranded migrant workers,  hundreds of legitimate agencies providing essential services and others being harassed by police and ruling party vigilante street gangs alike. 

This is not to say a lockdown is not necessary – going by the warnings of experts, it might well be the only way to contain the spread of the dreaded corona pathogen.  However, it is equally necessary to consider the plight of the crores of citizens at the lowest rungs of the livelihood ladder who are caught in a “whatever happens, we lose” syndrome.   That is why, while coming forth with a package of relief measures with a budget of 1.7 lakh crores of rupees, the government needs to take special care to address the most vulnerable sections of society.   

Implementation is the key.   So is logic.   The Finance Minister has announced an increase in MGNREGA wages from Rs. 182 to Rs. 202.  However, the intriguing aspect is that it is not clear how this will benefit anybody in a period of lock-down as nobody can be given any work.  When nobody is allowed to step out of his or her house,  as per the Prime Minister’s explicit orders,  how will they queue up of work in a MGNREGA project site?

A more logical suggestion is that the Modi government should have used the provision for payment of unemployment allowance under the MGNREGA. All workers registered in MGNREGA job cards could be paid an unemployment allowance for the period of the lock-down at the rate of either the prevalent minimum wages in the State concerned or Rs. 300 per day, whichever may be higher.  This has evidently not been thought through, otherwise Nirmal Sithraman would have mentioned it. 

Another aspect of the special package is that at present, the National Food Security Act (NFSA) covers about 71 crore “priority households” and about 9 crore Antyodaya Anna Yojana (AAY) households. However, about 25 per cent of rural households and 50 per cent of urban households are excluded from NFSA.  What will be their fate? 

Food insecurity and fear of starvation deaths is a prime concern in the present coronavirus lockdown environment.  It should have been the government’s top priority to extend the public distribution system is to all households without exception.  Otherwise the excluded categories would be left out in the cold – to die.  Also, there should have been a universal entitlement of 5 kg grain along with pulses, oil, salt and sugar per month – again without exceptions or exclusions.    

Similarly, while the Finance Minister mentioned that the construction workers will be supported by the State governments using the welfare fund for building and  construction labourers, it is not clear how this will be done to ensure that a vast number of construction workers are not excluded from the support.

Also, apart from announcing that farmers will be provided Rs. 2000, the relief measures do not address specific problems being faced by farmers. In large parts of the country, the Rabi crops are being harvested or are ready to be harvested. Harvesting often requires a large number of workers, including migrant workers, to work together. Similarly, a large number of workers are required for marketing operations. Farmers across the country also need to sell perishable produce like fruits, vegetables, milk, fish, eggs and poultry.

With closing down of markets, farmers are unable to sell, resulting in a crash of producer prices just as retail prices are skyrocketing. The losses on account of such disruption in production and supply chain are likely to be immense. In comparison with these losses, Rs.2000 being provided under PM-KISAN is meagre.  The Modi government must announce that any losses on account of disruption in farm activities or markets would be covered by farm insurance schemes, and that the benefit of these would also be extended to farmers who are not already enrolled under schemes such as PM Fasal Bima Yojana.

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Frontier
Mar 27, 2020