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.

  1. The moves that are welcomed
    1. A section of economists have welcomed the Centre’s move to double the ration allocations as part of a welfare package.
    2. It will help the poor communities deal with the impact of COVID­19 and its economic repercussions. 
    3. 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. 
      1. It will offer relief to businesses that have been forced to shut down operations, and also to employees earning meagre salaries.
    4. The move to double the amount of collateral free loans under NRLM for SHG will potentially benefit seven crore households. 
  1. Associated Reservations
    1. About Cash transfers
      1. The cash transfers seem too little and also stares at a degree of exclusion error. 
      2. This package seems to reach those who are connected to bank accounts and formal payment systems. 
      3. Certain groups of daily wagers and informal workers may be left out.
    2. MNREGS
      1. Many States have closed down MGNREGA worksites in order to curb the spread of COVID­19.
      2. So many workers will not be able to benefit out of the daily wage hike.
    3. Missing links
      1. 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. 
      2. The Jan Dhan account transfers could have been more generous with a stipulated amount of at least ₹1,000 a month. 
      3. Ideally the government should have announced a relief package for the corporate sector and the middle class along with the PMGKY.

Way Forward

  1. The Fiscal deficit limits need to be relaxed to cope with the emergent situation
    1. Many countries of the world that had announced stimulus packages involving 10­12% fiscal expansions.
    2. Put into perspective, this relief package is only about 0.75% of India’s GDP.
  2. 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.
  3. 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