India’s stimulus package leaves out poor workers
Some weeks ago, India was among the large economies that had announced a relatively small stimulus package when compared to the size and needs of its population and economy. The anomaly was corrected on Tuesday by Prime Minister Narendra Modi. The government he said would spend Rs2 trillion to provide support to people and industries. In terms of percentage, this is about 10 per cent of the GDP of the country and sounds like an ambitious plan to provide support to the economy that is in free fall during the Covid-19 pandemic.
On the face of it, some of the measures announced by India’s finance minister Nirmala Sitharaman on Wednesday sound promising. The collateral-free loan programme for 4.5 million micro, small, and medium-sized companies should provide much-needed liquidity and allow firms to reboot their machinery. The government has also given a credit guarantee for non-banking financial firms which should again provide support to small businesses. Besides, liquidity in the system will be enhanced with faster tax refunds. These are good measures overall but are they enough for everyone?
What was surprisingly missing from the announcement were measures for migrant workers who rely on their wages and since the start of the lockdown have become unwanted refugees in the states in which they work. They need direct cash transfers at the moment. They have no ways to sustain themselves as they march hundred of kilometers without food and water in most cases to reach their home towns. This is not a small percentage, but a sizeable portion of people that is looking to the government for help and succour in these trying times. There is no other way than direct cash transfers to help the bottom rung of the population that is bearing the brunt of this lockdown.
India’s unemployment rate has spiked to more than 25 per cent, which means one in every four Indians is presently out of a job. The country has a large unorganised sector and there are no credible numbers to suggest the rate of unemployment considering many are out of work at the moment.
Modi’s vision of a self-reliant India that is a manufacturing hub needs a deft and practical plan that keeps workers’ reforms at heart. His speech was filled with optimism, and he has the support of millions of the country. The government now needs to step up efforts, go beyond the optics, and provide relief to the poor who voted it to power for a second term.