Simi Mehta, Balwant Mehta, Arjun Kumar
The worldwide spread of novel coronavirus disease (COVID-19)is severely affecting the global economy and as per the recent updates almost one-third to half of the global population are now under some form of a lockdown. This has threatened an economic bloodbath, where practically all economic activities around the world are witnessing a closure.
According to the International Labour Organization, nearly 25 million jobs could be lost worldwide due to the pandemic and would mean income losses for workers between USD 860 billion and USD 3.4 trillion by the end of 2020. This will translate into falling consumption of goods and services, impacting the businesses and in turn viciously affecting the national economies. Among other continents, Asia would witness disruptions in backward and forward linkages in supply chains. Significant providers of employment like manufacturing, tourism and hospitality, travel, services and the retail industries along with small and medium enterprises, have already begun to bear the acute brunt of COVID-19.
Choosing between Human Health and Economic Health
Though India’s number of reported coronavirus infections remains relatively low (around 800, as of March 27, 2020) vis-à-vis other countries, it is feared that the pace of spread of the virus in India similar to that of China, Europe or the United States would have sweeping disastrous consequences than anywhere else. The reason for this is not just the sheer magnitude of its population of over 1.3 billion, but also its inept and crippling health systems and basic infrastructure, inadequate and untrained human resources leading to poor delivery of services. COVID-19 has just transcended into its third stage in the country.
As India was preparing itself through preventive actions to stop the further spread of the virus, Prime Minister announced nationwide lockdown – comprising every state, every Union Territory, every district, every village, and every lane-for 21 days starting 00:00 hours of 25th March, and enforced the Disaster Management Act 2005.
The irony of the situation is that while there is anacknowledgementon the need forsocial distancing and self-isolation and the preeminence of human lives and well-being, there are growing concerns over adding to theseverity of economic and social impact that the lockdown would have on the country. This would be especially embossed considering the already prevailing economic slowdown. Economists like Kaushik Basu and Arun Kumar have echoed apprehensions that failure to provide essential goods and services to the bottom 50 percent of the population could bring India to the brink of mass sufferings and social revolts.
Cities as engines of growth have come to a grinding halt. The reason for this is that the ‘citymakers’ like the daily-wage migrant (seasonal and circular) labourers (estimated at over 50 million), street vendors, auto or rickshaw drivers, construction and utility workers are finding it onerous to survive amid no work and lack of social protection and rights, or proper inclusive policies is expensive and inconceivable.Similar is the plight of small businesses as well as freelancers and those operating in the gig economy, who have begun to bear the brunt of national lockdown. On the other hand, big businesses and regular salaried citizens, though bearing the cost of social distancing, can navigate the rough waters and survive.
Livelihood in a Lockdown too!
Before delving into the lurching livelihood situation in India, it is important to highlight some major trends in the prevailing national-level employment. In 2018, India’s population was estimated at 134 crores consisting of 26 per cent of children (0-14 years) and 74 per cent adults (15+ years). The adult population (96 crores) includes 64 per cent working age people (15-59 years) and 10 per cent senior citizens (60+ years).As per recent Periodic Labour Force Survey(PLFS) report 2017-18, around 45 crores (47 per cent)adults were working in the country. Over half (52per cent) of the workers were self-employed followed by casual workers (25 per cent) and the remaining were regular or salaried (23 per cent). Of these, the casual workers are the most vulnerable due to the irregular nature of their work and daily-wage payment based on their work schedule.
The status of other workers also does not provide a great sight, as most of the self-employed (96 per cent) were either own-account workers or unpaid family worker (sole workers), with only 4 per cent constituting employers or entrepreneurs. On the other hand, over 70 per cent of the regular or salaried workers had no written contract, and 72 per cent of them were engaged in the private sector, nearly half (46 per cent)were not eligible for paid leaves and 45 per cent were not entitled to any social security benefits including health care. This means only 42 per cent regular or salaried workers (9.6 out of 23 per cent) have job security or working in organized sector, while rest 58 per cent of are without any job security.
Share of Casual/Informal/Self-employment (separating regular employment) by different sectors for 2017-18 (UPSS and all age; in %)
|Sector||Self Employed||Casual||Regular Formal||Informal||Total|
|Hotel and Restaurant||58.1||9.8||4.6||27.5||1.9|
Informal employment: paid work without any social protection; and total is percentage share of the sector in total employment
Source: PLFS, 2017-18
Number of workers (in millions) of Casual/Informal/Self-employed (separating regular employment) by different sectors for 2017-18 (UPSS and All age)
|Sector||Self Employed||Casual||Regular Formal||Informal||Total|
|Hotel and Restaurant||5.1||0.9||0.4||2.4||8.7|
Sector wise understanding of employment in the non-agriculture sector includes: 72 per cent of the casual workers engaged in construction,14 per cent in manufacturing and 12 per cent in other services; about 12 per cent of the self-employed engaged in trade, hotel and restaurants, 10 per cent in manufacturing, 5 per cent in transport, storage and communications sectors and 4 per cent in other services.
Among the regular or salaried workers, 22 per cent worked in manufacturing, 14 per cent in trade, hotel andrestaurants, 13 per cent in transport, storage andcommunications, and 8 per cent in finance, business and real estate etc.
Thus, in the context of the prevailing pandemic and lockdown, the jobs and earnings of an estimated 20 crore workers, including casual workers, regular or salaried workers without any job security and sole self-employed (own account or unpaid family), are at stake. This figure will only increase if another 3 crores people who engaged in begging, prostitution and others are included.
Interventions at the Government Level
The absence of market activity will directly and adversely impact these vulnerable people and their families. The Union and state governments have made appeals to the private sector to not layoff or cut the salaries for the workers during this time of crisis. Financial relief packages have also been announced by the states. For instance, Uttar Pradesh has announced a financial package of over INR 353 crores to give cash handouts to an estimated 3.53 million daily wage earners and labourers. Moreover, amount of INR1,000 each will be given to 1.5 million daily wage labourers and 2.03 million construction workers across the state through direct benefit transfer. That means, the beneficiaries including rickshaw pullers, hawkers and kiosk owners, will get the money directly into their bank accounts.
Punjab government has declared an immediate relief of INR3,000 to each registered construction worker in the state. A total sum of INR 96 crores has been earmarked for this purpose. The Delhi government also announced payment of up to INR 5,000 as pension to the 8.5 lakh poor beneficiaries and free ration to those entitled to food subsides under public distribution system (PDS).
While promulgating the orders for a ‘janata curfew’ to be observed on March 22, 2020, the Prime Minister (PM) in his address to the nation on March 19, 2020 announced that a COVID-19 Economic Response Task Force, chaired by Finance Minister (FM) had been set upto combat the impact of coronavirus on the Indian economy. Interestingly, the FM was caught unawares of such a task force during her press conference to announce several taxation reliefs measures on March 24, 2020. Most of these related to the deferring of payments of direct taxes, GST for three months, and interest rate subvention/other relaxation on such payments. In other words, the filing requirements of these taxes has been postponed to July 2020.On the same day, the PM announced a ‘total lockdown’ of the country starting at 00:00 hours of March 25, 2020.
After around 36 hours of the lockdown into effect, on March 26, 2020the FM announced a slew of welfare measures under yet another scheme- Pradhan Mantri Garib Kalyan Yojana (PMGKY), amounting to INR 1.7 lakh crore (US$ 22 billion), and also provided the number of poor people of the country that these would cover- 80 crore or 2/3 of India’s population. Atleast this announcement reveals the number of ‘poor’in the country, which the government acknowledges require support. A reality check is self-evident when one relates it with the recent rigidity of the government in concealing the NSSO data on consumption expenditure (used to compute poverty estimates).
Intended to reach out to the poorest of the poor, with food, gas andmoney in hands, so that they do not face difficulties in buying essential supplies and are able to meet their essentialneeds, the major highlights of the Pradhan Mantri Garib Kalyan Yojana package are:
1. Special insurance scheme amounting to INR 50 lakh for health workers fighting COVID-19 in government hospitals, wellness and health care centers. Under this scheme approximately 22 lakh health workers would be provided insurance cover to fight this pandemic.
2. PM Garib Kalyan Ann Yojana: an additional five kg of rice/wheat will be given to 80 crore poor people, above the existing 5 kg they receive, along with 1-kg pulses according to regional preferences per household free of any charge, for a period of three months.
3. Under the PM KisanSamman Nidhi scheme, instalment of INR 2,000 in the first week of April will be transferred to the bank accounts of 8.7 crore farmers.
4. PMKJY components:
- 20 crore Jan Dhan women account holders will be covered under the relief package and an ex-gratia cash transfer of INR 500 per month for the next three months.
- 8 crore poor families will get free cylinders for three months under the Ujjawala scheme.
- To prevent any disruptions in the employment of those who earn less than INR 15,000 per month, the government will bear the cost of Provident Fund (PF) contribution of both employer and employee (24 per cent) for the next three months. However, this is only for those businesses which have up to 100 employees.
- 3 crore senior citizens, persons with disabilities and widows will get one-time additional amount of INR1,000 in two instalments, will be given through DBT over a period of three months.
5. With effect from April 1, 2020, the wages under MGNREGA has been increased by INR 20 per day or INR 2000 annually per worker on an average. as additional income to help daily wage labourers.
6. Collateral-free loans for the 63 lakh women organized through the Self-Help Groups have been doubled from INR 10 lakh to INR 20 lakh under theAajeevikaDeenDayalAntyodaya Yojana or National Rural Livelihood Mission.
7. Other components of PMGKY:
- Employees’ Provident Fund Regulations will be amended to include pandemic as the reason to allow non-refundable advance of 75 per cent of the amount or three months of the wages, whichever is lower, from their accounts. Families of 4 crore workers registered under EPF can take benefit of this window.
- State Governments have been directed to utilize the welfare fund for 3.5 crore building and other constructions workers created under the Building and other Construction Workers’ Act, 1996 to protect them against economic disruptions.
- The state governments will be asked to utilize the funds available under District Mineral Fund(DMF) for supplementing and augmenting facilities of medical testing, screening and otherrequirements to preventing the spread of COVID-19 and for the treatment of the patients affected with this pandemic.
The above interventions can be represented in the table below:
To provide an insight into the actual (as per the government statistics) numbers of beneficiary claimants across the above categories of PMGKY and also some information on those that have been left out from its purview are represented in the table below:
Vital current statistics from official sources (most recent available):
|Number in million|
|PAN card (linked with Aadhar) (176 million yet to be linked)||308|
|GST registrations (GSTN)||12|
|Companies (active) (MCA)||1.2|
|MSMEs (with Udyog Aadhar) Micro Small Medium||7 6 0.72 0.02|
|NGOs (registered with NITI Aayog NGO Darpan)||0.09|
|Factories/industries (ASI, 2017-18)||0.24|
|Establishments operational (Economic Census, 2013)||58.5|
|Ration Card under NFSA (90% linked with Aadhar)||234|
|Jan Dhan accounts – PMJDY||382|
|MUDRA loan accounts (active)||58|
|PM KISAN beneficiaries (active) (total estimated 150 million)||93|
|MNREGA (active workers)||128|
|EPFO accounts (Aadhar seeded)||73.8|
|Employment Exchange Job Seekers||43|
|Building and other constructions workers (registered)||35|
|PM Shram Yogi Maan-dhan for unorganised||4.4|
|Atal pension yojana subscribers||21.2|
|PM Suraksha Bima Yojana enrolment||178|
|Ayushman Bharat e-cards issued (77.6 mn PM-JAY & 46.8 mn State cards)||124.5|
|Source: https://transformingindia.mygov.in/performance-dashboard/& Official database Compiled by Authors.|
The measures by the FM can be summarized as too late and too little, where the existing schemes have been consolidated and portrayed as providing a major aid for the benefit of the poor. It is difficult to understand the calculation behind arriving at the figure INR 500 (~US$ 7) in the Jan Dhan accounts to women and INR 333 (<US$ 5) to pensioners and to what avail would this meagre sum be? For instance, even if a family spends INR 20 per day to buy half a litre of milk, it comes to spending INR 600 a month, leave aside procuring vegetables.
Nutrition security certainly remains out of the consideration of the government in this support package. One must not be surprised when India’s ranks in the Global Hunger Index slips further down in the world rankings. Given the existing inflation and high costs of essential commodities, this scanty amount appears to be making a mockery of the poor by showcasing sheer tokenism.
As against the steps taken by other major nations in their fight against COVID-19, India’s relief package of around US $ 22 billion seems miniscule and excludes other sections like small and medium enterprises, migrant labourers, unorganized sector, pregnant and lactating women and children, those suffering with critical ailments, etc. This is in continuation of habitual inclusion and exclusion errors in the official database, which was also highlighted in the Economic Survey of 2016-17 that noted an estimated exclusion error from 2011-12 suggested that 2/5th of the bottom 40 percent of the population are excluded from the PDS. The corresponding figure for 2011-12 for MGNREGS was 65 percent.
The table below shows how miserly approach of India in providing much needed relief to each section of the economy. In fact, the PMGKY is eerily silent on utilizing the flagship programs on of the Modi government like the National Health Mission, PM-JAY: Ayushman Bharat (need of universal coverage) & Health and Wellness Centers, various component of National Urban Livelihood Mission, Swachh Bharat Mission, etc., to combat the fallouts. On March 27, 2020 Reserve Bank of India (RBI)also announced measure to reduce the repo rate by 75 basis points and CRR by 100 basis points (3 per cent from earlier 4per cent), and asked the banks to decide on moratorium on EMIs for next three months.
Source: https://qz.com/1819776/here-are-the-coronavirus-bailouts-being-prepared-around-the-world/ , Accessed on March 27, 2020
Analysis and Way Forward
The unprecedented consistency of a three-month planning and coordination from different stakeholders of the government,inclusion of COVID-19 tests under Ayushman Bharat and capping of the test price at INR 4500 by private hospitals, and commitment to procure 40,000 ventilators by June 2020 are welcome moves and provides a much-needed respite. But a detailed strategy for the execution and delivery of services remains veiled. While focusing on symbolisms, major attributes like actual figures of payment for each beneficiary; daily or weekly timeline and roadmap for the infusion of these support measures, their monitoring and implementation, strengthen the monetary policy stance for utilizing the INR 15000 crores for the procurement of kits and equipment for healthcare and infusing it with more funds appears to be eschewed. There is an urgent need to include healthcare under the ‘Emergency Sector Lending’ and execute it on a war footing.
While the total aggregated amount announced for the benefit of its vulnerable sections appears to be huge, yet per person benefit come out to be inadequate. Further, it is evident that the lockdown was put into place without having a well-crafted strategy including the assured supply of essential commodities, services especially for medical care, kits, equipment, manpower and infrastructure preparedness as well as what happens to the poor and those who lose their livelihoods during this social distancing diktat and COVID-19 fears.
In the absence of clear-cut guidelines and proper implementation plans, the implementation of all these announcements appears to be allusive. This specifically demonstrates the vile attempt of the insensitive bureaucracy continuing with their colonial ‘collector’ legacy lacking any compassion for the masses. In fact, the much-boasted strong macro-economic situation of the country over the past few months is exposed considering the risk averse and pessimistic approach towards public spending over the last few days.
There is no proper national level registry for poor and people involved in informal jobs or sector such as vegetable vendors, construction workers, rickshaw pullers, auto-rickshaw drivers and temporary staff etc. There is urgent need for these registries to be instituted and updated using latest digital technologies and innovations, along with a dynamic unemployment registry to provide direct economic (universal basic income), health (universal coverage) and other necessary contingency protection and security support.
The government must fast-track the payment of delayed payments to each public and private enterprise in this time of crisis. Further, the utility bills of the most vulnerable must also be paid for by the governments. Also, to ensure that each ward (84420 in 4378 cities) and each Gram Panchayat (262734 in 6975 Blocks and 706 Districts) are fully equipped to serve the populace, each of them must be provided with emergency funds from the existing schemes like the Swach Bharat Mission, Jal Jeevan Mission, etc. This will facilitate decentralization, enable maintaining hygiene, sanitization, providing necessary services, etc. The government must join forces with its resilient private sector, non-profits, citizens and faith institutions willing to steer through these turbulent times.
In totality, in the existing relief and monetary aid the masses have been left out from the government’s care, which is its primary duty. This shortcoming must be plugged as soon as possible and comprehensive pan-sectoral reforms for 21st Century must be undertaken to create the New India that we are dreaming of.
Picture Courtesy: Getty Images