Context: A ₹1.7 lakh crore relief package was announced by the centre, in response to the COVID19 pandemic and in turn an all-out lockdown.
- The Pradhan Mantri Garib Kalyan Yojana had been announced to take care of the needs of poor and migrant workers, farmers, women, pensioners, widows and the disabled.
- It seeks to provide free food and cash transfers to support the poorest and most vulnerable citizens during the crisis.
- Most of the measures will be rolled out for a period over three months.
What’s there in the relief package ?
- Food Grains
- It has been that over the next three months, each person who is entitled to get food grains under the National Food Security Act would get an additional 5 kg wheat or rice for free.
- The above stipulated amount of foodgrain is in addition to the 5 kg of subsidised foodgrain already provided through the Public Distribution System (PDS).
- Also, one kg of pulses would also be provided for free to each household.
- It also stated that the first instalment of ₹2000 due to the farmers under the PMKISAN income support scheme will be credited in April.
- Cover for healthcare workers
- The relief package mandates a ₹50 lakh medical insurance cover for the next three months for about 22 lakh health workers in government hospitals.
- Widening its coverage, it also includes ASHA (Accredited Social Health Activist) workers,paramedics, nurses, doctors, etc.
- Cash Transfers for Vulnerable sections
It will be forwarded through a mix of existing schemes and additional sums under the Pradhan Mantri Garib Kalyan Yojana.
- Women, Disabled, MNREGA worker
- In a move to benefit three crore poor pensioners, ₹1,000 in two instalments would be provided to widows and disabled people over the next three months.
- ₹500 a month for the next three months will be provided to the 20 crore women having Jan Dhan accounts.
- Daily Wage hike for MNREGA workers from ₹182 to ₹202. An additional amount of ₹2,000 too will be provided to each worker.
- Employee Welfare
- The Central government will bear the cost of both employer and employee contribution (a total of 24%) to the Employees Provident Fund (EPF)
- This provision will apply for small companies which have 100 employees or less, of whom 90?rn less than ₹15,000 a month.
- It also seeks to amend the EPF regulations that allows nonrefundable advance of 75% of the amount standing to the credit of the member, or three months wages, whichever is lower.
- The amount of Collateral free loans provided for women self help groups under the NRLM have been doubled to ₹20 lakh.
- The Centre directed the States to use the ₹31,000 crore sitting with the Building and Other Construction Workers Welfare Boards.
- The States can also use the money under district mineral funds for medical screening, testing and treatment.
Response to Centre’s Package
The central government’s relief package of ₹1.7 lakh crore has garnered mixed response from Economists and social scientists.
- The moves that are welcomed
- A section of economists have welcomed the Centre’s move to double the ration allocations as part of a welfare package.
- It will help the poor communities deal with the impact of COVID19 and its economic repercussions.
- Centre’s announcement to bear the cost of both employer and employee contribution (a total of 24%) to the Employees Provident Fund (EPF), will benefit 80 lakh employees, and incentivise four lakh establishments.
- It will offer relief to businesses that have been forced to shut down operations, and also to employees earning meagre salaries.
- The move to double the amount of collateral free loans under NRLM for SHG will potentially benefit seven crore households.
- Associated Reservations
- About Cash transfers
- The cash transfers seem too little and also stares at a degree of exclusion error.
- This package seems to reach those who are connected to bank accounts and formal payment systems.
- Certain groups of daily wagers and informal workers may be left out.
- Many States have closed down MGNREGA worksites in order to curb the spread of COVID19.
- So many workers will not be able to benefit out of the daily wage hike.
- Missing links
- The salary limit for total PF contribution could have been set higher at ₹25,000 per month as it doesn’t entail any cash outgo for the government for now.
- The Jan Dhan account transfers could have been more generous with a stipulated amount of at least ₹1,000 a month.
- Ideally the government should have announced a relief package for the corporate sector and the middle class along with the PMGKY.
- The Fiscal deficit limits need to be relaxed to cope with the emergent situation.
- Many countries of the world that had announced stimulus packages involving 1012% fiscal expansions.
- Put into perspective, this relief package is only about 0.75% of India’s GDP.
- It should now turn its focus towards businesses that are running out of cash and are at the risk of defaulting on even salaries and statutory commitments.
- These amounts will also have to be revised upwards going down the line.
All in all, it is a good move to start with but more needs to be done. The challenges in implementation need to be tackled along with. A cue can be taken from the U.S. which is in the process of finalising a $2 trillion relief package. Lastly ,the government should keep itself on toes round two of the relief package.
Source: The Hindu
Image Source: The Hindu