Need for more
Relief for the poor is welcome, but only a beginning
The government has finally announced a relief package, worth ~1.7 trillion, to blunt the effects of the lockdown imposed to contain the spread of COVID-19 on the poor. The government’s intention and its plans are welcome. However, it should ideally have been announced with the prime minister’s address, as its absence resulted in uncertainty and panic among the most vulnerable sections of the population.
The package features aspects such as a wage increase under the rural employment guarantee scheme, higher caps on collateral-free loans, free gas cylinders under the Ujjwala scheme, and tweaks to the employees’ provident fund. It is not inordinately large, reflecting both the constraints on the exchequer and the design of the package that largely uses existing channels to funnel additional support to vulnerable households. This is a sensible intervention. That said, however, it is unclear why the package is due to be implemented only from April 1. The issues arising out of the lockdown have begun to affect people already — especially for groups such as daily wage earners and migrant labourers. If nothing else, cooked and healthy food needs to be prioritised to keep immunity levels high. The Union government should look at those states, such as Tamil Nadu, which have had some success with food kitchens, and produce a template that states could follow.
One notable gap in the package is the effect on producers. Small and medium enterprises, in particular, will require targeted support. Such support has been a feature of similar government interventions elsewhere in the world, small businesses will in particular need help with cash flow. Given the demand conditions and disruptions in supply chains, business would have dried up for small and medium enterprises. Further, generalised liquidity problems suggest that the flow of already due payments may be held up. The objective of the package should be to tide them over what is hopefully a relatively short-term problem and thereby prevent long-term negative effects on the economy in general and employment in particular.
Now that some immediate action has been taken to impose social distancing and address the most vulnerable economically, the government should turn its attention to dealing with the medical aspects of the crisis. The production or import of testing equipment, and personal protection paraphernalia, such as masks, and of intensive-care essentials, such as ventilators, must be stepped up on a war footing. Special quarantine facilities can be developed using excess capacity in the real estate sector. The private sector has expressed its willingness to co-operate in this endeavour, and the government must meet it more than halfway. The prime minister announced that ~15,000 crore will be allocated to strengthen the health infrastructure. This money must be spent to a plan and as part of a comprehensive programme — one that prioritises the access to protective equipment of health workers in particular, some of whom are working without even masks. This is something that cannot wait even a day. Finally, the scale of testing will have to be stepped up manifold, from the very low level so far in India. The World Health Organization and all experts have repeatedly insisted that widespread testing is critical. India still has a long way to go in its fight against COVID-19.