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Are You Satisfied With the Government’s Aatmanirbhar Economic Plan?

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This post is a part of YKA’s dedicated coverage of the novel coronavirus outbreak and aims to present factual, reliable information. Read more.

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India has entered a remarkable lockdown which is probably one of the toughest and most stringent in the world. The two months of solid lockdown, i.e. 60 days of no output economic activities, has hit India with a major recession. The kind of crisis India is confronting now comes after 40 years of the 1979 crisis. It seems like an extreme recessionary emergency, compounded by a strong humanitarian element to it.

In the time of such a crisis, when many have lost their jobs and are struggling for basic food and shelter needs, there have been many expectations from this economic package, particularly from the poor and migrant workers. The least the poor people need are necessities—necessities like payback for fundamental costs like food, rent, electricity, and support to go back home.

Finance Minister Nirmala Sitharaman unveiled the 20-Lakh-Crore plan, announced by PM Modi

The idea that home means safety is universal and applies to regardless of who is rich and poor. This was one amongst the foremost basic expectation from the bottom of the pyramid, i.e. the migrant poor. In the event that they cannot earn, they want to get home where they would have a minimum of food and shelter.

PM Modi, in the light of the ongoing coronavirus crisis, announced an economic package which he called “The Self Reliant Economic India Mission” i.e. the AATMANIRBHAR ECONOMIC PLAN. He said this plan would be worth ₹20 Lakh Crore or 10% of the GDP.

Within five days, Finance Minister Nirmala Sitharaman unveiled the 20-Lakh-Crore plan which uncovered the veracity of the claims made by our PM. The 20-crore package announced by PM was yet another pretentious furnished plan to make the headlines.

Rather than saying we are with you, PM chose to say, you’re on your own. That wasn’t what the PM wanted to mean, of course, but why did a government resort to telling people to be self-reliant (aatmanirbhar)? Is it because all that the government did in its two years of the tottering economy is crush people’s self-reliance?

There’s a feeling of being let down from all the sectors of the economy since we have done nothing to diminish the immediate sufferings of the individuals. The government lacks the sagacity that offering loans on easier terms without collaterals isn’t the correct arrangement for the current emergency.

We have asked farmers to take loans when a lot of farmers commit suicides due to the inability to repay. In the absence of demand, there is no use of easier credit, but we have asked street vendors to take loans despite the lack of demand and transportation. We have people who have no income to pay electricity bills and rent; for that, we have asked DISCOM to take loans. The key sectors of the economy like automobiles, real estate, MSMEs are suffering from lack of demand; we have asked them to take loans.

Actuating supply without creating demand won’t help the people, and therefore the economy, out of the crisis, as said by many experts.

The effect of the current emergency will be more profound and long-lasting among the vulnerable, who are defenceless. Cash transfers were advocated as the first line of action for countries across the world, including India, which, however, India fizzled to perceive.

Many economists over the world recommended that within the given circumstance, the government must utilize money exchanges. Looking at the urgency to deal with the situation, many have suggested giving up the orthodox monetary policy and implementing income transfer schemes. Any support package will have to rapidly reach the poor.

Though they appear to be the easiest and speediest alternative, there are a few impediments connected to them:

  1. Economists fail to acknowledge the mess within the banking industry of our country. The Aadhar-Payment Bridge System has led to several failed Direct Benefit Transfers. The thin density of bank branches in rural areas will create more crowding, which successively will destroy the entire idea of social distancing to fight COVID-19.
  2. There can be an erosion of the value of cash due to the plausibility of storing goods on an expansive scale, driving to cost rise.
  3. Well-regarded financial analysts over the globe have proposed that the government should make considerable cash transfers to the vulnerable sections of the population’s Jan Dhan or MNREGA bank accounts over the next three months. The measures suggested above will leave out an imperative category of powerless individuals, who are working in urban areas but whose homes are in rural areas. With the lockdown, they are stuck without work, and sometimes even without shelter in urban areas. They will not be covered by either the MNREGA or the PDS.
  4. It is not trivial to determine who gets the cash, and how much? Will it be for all employees employed at MNREGA? Should all get the same, regardless of how much they’ve worked in the past?
  5. While existing security net programs can be mobilized to urge cash into the pockets of a few of the existing poor rapidly, this is not the case for the new poor. Typically, the new poor are likely to suffer more, particularly those who are working in urban areas and are employed in informal services, construction, and manufacturing.
community kitchen bihar
A community kitchen set up for migrants during the COVID-19 crisis

Yet there are many ways through which these limitations can be overcome for the easy cash transfer by:

  1. Avoiding Aadhaar-Payment Bridge System and using NEFT instead for all the cash transfer schemes (for example, pensions, MNREGA wages, Pradhan Mantri Kaushal Vikas Yojana, etc.)
  2. Not making Aadhar mandatory. The government needs to trust its people in this crisis.
  3. Work guarantee for MNREGA workers and cash transfers through their bank accounts without work due to community risk transmission for the coming three months.
  4. Advanced and enhanced pensions for elderly, widows, and disabled persons.
  5. The central government could utilize the excess stocks to provide double rations to all ‘Priority’ households by free distribution for 2-3 months to reduce panic buying and hoarding.
  6. Community kitchens and shelter for migrants.

The cash element is the most critical. The government should let the cash in the hands of the poor since they will make the best and the most reasonable choices with the cash. Among the list of measures announced, plenty of them were fresh poses to old proposals or a mix of earlier decisions. The government did not do many things, and even the things they did are insignificant.

The crisis today is immediate and short-term, which can have long-run impacts and the measures taken by the government will not satisfy the immediate needs and alleviate the sufferings of the individuals. This plan, which is marketed as a 20 lakh crore package, is related to credit and infusing liquidity.

Most of the cash included will depend upon the degree to which individuals will borrow that money or the degree to which the banks will loan that money. There are a lot of doubts in all the sectors since the same credit measures have been taken by past governments, and much of the money didn’t come back, as dreaded by the prudent bankers. And this might happen again, tempting people to become more corrupt.

The government has made a plan without seeking out any other options. The government seems to have accepted that the economy is going to contract, and none of these is amenable to a proper solution.

The government had two options, one to address the immediate issues, as opposed to worrying about the long-term problems, and the other to save the bigger plans for future adverse situations that are yet to come. The Indian government has preferred to prepare for the worst than to meet the immediate needs. This is a package that promotes India’s post-COVID-19 economic recovery. At least, that’s what the policy response screamed.

Where the rest of the world launched capital stimulus schemes, i.e. provide more cash in people’s hands to increase demand to boost the economy, the Aatmanirbhar plan of the Indian government has a very small vision. During times like these, people would prefer to get money straight into their pockets, rather than take loans. In the movement of people and goods and services, normalcy could have been restored a little faster if people had real cash in their hands.

The current government’s package does not reach out to the most vulnerable. Once again, the government has launched a Headline package that will not render any help to the migrant workers who are giving up their lives on the roads due to lack of food, transport, and money.

The government, therefore, requires a prominent political will and honesty to get this country out of the suffering and misery, because a strategy that does not support the poor is nothing but guile.

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A student from Delhi School of Social work, Vineet is a part of Project Sakhi Saheli, an initiative by the students of Delhi school of Social Work to create awareness on Menstrual Health and combat Period Poverty. Along with MHM Action Fellow Sabna, Vineet launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society.

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Find out more about her campaign here.

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A former Assistant Secretary with the Ministry of Women and Child Development in West Bengal for three months, Lakshmi Bhavya has been championing the cause of menstrual hygiene in her district. By associating herself with the Lalana Campaign, a holistic menstrual hygiene awareness campaign which is conducted by the Anahat NGO, Lakshmi has been slowly breaking taboos when it comes to periods and menstrual hygiene.

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