Economists and social scientists on Thursday welcomed the Centre’s move to double ration allocations as part of a welfare package to help poor communities deal with the impact of COVID-19 and its economic repercussions. However, they felt that the cash transfers, which form a key part of the welfare package, may be too little and also failed to include in the safety net some particularly vulnerable groups.
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“One problem is whether we have covered all vulnerable groups,” observed D.K. Srivastava, chief policy advisor for Ernst and Young India and a member of the advisory council to the 15th Finance Commission. “Essentially, this package seems to reach those who are connected to bank accounts and formal payment systems. But certain groups of daily wagers and informal workers may be left out,” he said, adding “these amounts will also have to be revised upwards once these schemes unfold and we have a better sense of how long this crisis will last”.
However, he felt the bigger challenge would be the financing of the announced welfare measures as well as a more comprehensive stimulus package that would be needed for industries. “The government has tried to strike a balance between the available resources and the needs,” he said, adding that the fiscal deficit limit would need to be relaxed to cope with the situation.
CARE Ratings Chief Economist Madan Sabnavis noted that globally, many countries had announced stimulus packages involving 10-12% fiscal expansions. “In comparison, this package is only about 0.75% of India’s GDP, which is marginal. It is a good beginning and something is better than nothing, but more needs to be done,” Mr. Sabnavis added.
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He added that the real challenge would come in implementing these measures. For example, while there was sufficient surplus foodgrains available in government warehouses and an existing system for further procurement, the system for procurement of pulses needed to be created in most States.
“The doubling of rations is a very good decision, but what about the huge numbers of migrant workers left stranded around the country? This is a glaring gap,” remarked Reetika Khera, an economist and social scientist at the Indian Institute of Management - Ahmedabad. “There need to be community kitchens set up to feed them right where they are, in schools and community halls, so that they don’t panic and create a further health emergency.”
She also welcomed the cash transfers to pensioners, widows and disabled people, although she opined that ₹1,000 over three months would be insufficient. “But there is no real support to MGNREGA workers at the moment, given that work sites have closed down because of the infection. They should have been given cash instead of Jan Dhan account holders,” she added.
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“It’s a good start, but hugely inadequate,” said Dipa Sinha, an economics professor at Ambedkar University, who is also associated with the Right to Food Campaign. “Many of these steps were actually needed in response to the economic slowdown even before COVID-19,” she added.
Ms. Sinha noted that the government had not provided a detailed financial break-up of the package. “From what they have announced, there is no way it adds up to ₹1.7 lakh crore unless you pad it up with items like the PM-KISAN instalment, which involves no additional funding, or the construction workers’ welfare funds, which actually came from employers, not the government,” she asserted.