Prime Minister Narendra Modi’s Economic Stimulus package to revive the collapsing Indian Economy reeling under the twin crisis of an already declining Economy and the enforcement of a lockdown due to the pandemic has not gone down well with our Economists . The Prime Minister had announced a 20 Lakh crore Economic Stimulus Package (10% of GDP of FY 2019-20) which would revive the economy by infusing liquidity to revive demand and lead the country to become self reliant (Atmanirbhar Bharat).

The following were the reactions of renowned Indian Economists about the Economic Stimulus Package.

Dr. Subramanian Swamy, Rajya Sabha M.P. and renowned Economist.

“These proposals however did not enthuse the affected stakeholders in the economy, nor did it lift the spirits of the common man, who was already depressed by the consequences of the lockdown on his pocket book and on employment. A priority need in this hour of distress is to enable the poor and the weak to stand up on their own feet. To enable this at this stage, genuine stimuli are a priority. If this family gets Rs 2,000 in cash they will become part of the demand stimulus for kirana shops and dhabas; and this will now be a family with hope restored”.

Dr.Raghuram Rajan,Former Governor, Reserve Bank of India and Economist :

“Giving food grains to unemployed migrant workers, the poor and vulnerable is not enough. They also need vegetables and cooking oil and, most importantly, money and shelter. Now the government must make conditions in our cities better if it is going to attract back the millions who have fled to their vllages”

P Chidambaram, former Finance Minister of India and Economist:

“The government’s plan to provide 10 kg of grains to all migrant workers over two months, saying that with the assumption that each kg was worth Rs 40, the government will spend only Rs 400 on a migrant who has walked 400 kilometers”. “They’re treating him as if they’re not a human being.”

Abhijit Banerjee, Nobel Laurette and Renowned Economist:

“The Narendra Modi government should look at providing cash transfer to the bottom 60 per cent of India’s population to help revive the economy, it is not clear that targeting the MSME sector is the right channel. It is more about reviving demand. Giving money in the hands of everybody, so that they can buy in stores or they buy consumer goods. If you are in the red zone, you can say look whenever the lockdown is lifted, you will have money in your account, Rs 10,000 in your account and you can spend it. I think spending is the easiest way to revive the economy”.

Gita Gopinath, Chief Economist, International Monetary Fund (IMF)

“This is a crisis where people, especially those in the low-income category, are basically not being able to sustain basic spending. And that’s where the government has to play a role,”

She went on to explain that direct income benefit for marginalised classes will have a multiplying effect on economic activity. “By putting income in the hands of those who really are on a hand-to-mouth basis, the impact on economic activity is quite substantial and positive, and is the Government’s strategy to boost demand as against providing direct cash transfer is viable, Gopinath explained that putting direct cash in the hands of people who have been affected is precisely a way of preventing demand from collapsing. “So it (direct cash transfer) is a demand stimulus. You want to make sure that people can spend at this stage, at least on the most basic things that they need to spend on. And that is why it will have a positive effect on the economy.”

All of the above Economists without exception have recommended direct cash transfers to the accounts of the poor and the unemployed migrant labour who have been fleeing the Metros after their employers and the State Governments did not support them during the lockdown with basic needs and money. The apathy shown by some state Governments and the local civic bodies forced them to flee the Metros to their native villages in Bihar, West Bengal, U.P and Orrissa with their families and belongings on foot, walking along the railway lines. Many of them died of hunger and exhaustion. Several of them sleeping on the railway tracks were mowed down by the passing train as they could not realize that a train was approaching on the tracks they were sleeping on until it was too late and in spite of the Engine driver’s frantic efforts could not be saved. The Nation reacted to this horrific news with anger at the State and Central Government demanding that they should protect the poor and unemployed from the effects of the enforced lockdown due to the Covid 19 pandemic. The Centre Immediately swung into action and started the rail travel for the migrant labour who wanted to leave their present place of employment in the Metros and go back to their villages to be with their families. But this was not enough as there were millions of them who wanted to go back and all of them could not be accommodated in the trains on account of rules of the lockdown. Thousands were stranded near Railway stations and left to fend for themselves and their families. Though some good Samaritans and NGO’s provided them food, they had no money in their hands for other basic necessities. Thousands of them along with their families and possessions started walking to their far flung villages in the northern and eastern states like U.P. , Bihar, Orissa, Assam and West Bengal. The State Governments busy in fighting the pandemic, turned a blind eye on them. Meanwhile Prime Minister Modi announced a 20 lakh crore economic stimulus package to infuse liquidity and revive demand into the falling Economy. The Finance Minister Smt. Nirmala Seetharaman announced the details of the stimulus package a few days later, but there was no relief in the package for the poor, unemployed and the migrant work force. Though later it was announced that free food grains would be supplied to the poor and the unemployed with or without ration cards, there was no mention of direct cash transfers as suggested by our distinguished Economists.

The reason as to why the Government could not make direct cash payments to them was disclosed by the Finance Minister in her later press briefings. She said that the Government could not arrange for direct cash payments to the migrant work force and their hapless families as there was no data on migrants available with the Government and could not therefore be properly identified. This is one of the greatest drawbacks that every Government before the present Modi Government has also faced. It is found that without a proper identification of the beneficiary and direct credit to their accounts, the money is taken away by middlemen and corrupt officials and only a small percentage reaches the needy and the poor. This was one of the reasons that many of the poverty alleviation schemes could not succeed in the past. This is as good as gifting away the tax-payers money to the corrupt middlemen.

However, by providing free food grains to the migrants, they are at least saved from starving to death. But this can only be a temporary relief.

Now that there has been a relaxation of lockdown, the same migrants who had left the metros due to the hardships suffered by them due to lockdown are being wooed and coaxed by their former employers to come back on higher wages so that they can start their manufacturing units. They find that the local workers are not skilled and also demand higher wages and better working conditions being controlled by the local Trade Unions.

The Government should now take following measures to see that the same situation does not arise in future and the migrant workers are not exploited.

• Every worker in the Country should hold and be identifiable by the Aadhar card, Ration Card, driving license, Voters card or a Passport.

• Every worker who is a major should have a Bank account.

• Every worker permanent or casual should be registered with Ministry of Labour

• It must be the responsibility of the Employer to see that their worker’s (permanent or casual) wages/salary is credited to their Bank accounts, they should also be made responsible for enrolling them in Life Insurance, Medical Insurance, unemployment insurance and other social security schemes of the Government and ensuring that the premiums are deducted from the salaries/wages and credited to the relevant accounts. In case of medium and big manufacturing units employing migrant labor, they should also provide living accommodation to them in the factory premises or nearby at reasonable rent.

If all the above measures are implemented by the Government, the migrant work force which is the backbone of the economy may not again face the harrowing situation which they had to face recently due to the Covid 19 pandemic and the enforcement of lockdown.

S.G.B.Rao, LSW Lifescienceworld
www.lswlifescienceworld.com