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India’s COVID Relief Strategy: A Step To Impose A Neoliberal Economic Regime?

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

The Indian government’s Covid-19 relief package hit headlines recently. Shrouded in the powerful figure of Rs 20 lakh crores and the promise of an ‘Atma Nirbhar Bharat’, the package is appealing. However, a closer look reveals its loopholes. Notably, various economists have concluded that the actual fiscal impact of the package will only be around Rs 1.5 lakh crores i.e. 1% of the GDP as opposed to the 10% claimed by the government.

1. Collateral-free loans

A remarkable feature of this package has been the focus on MSMEs. Collateral-free loans worth Rs 3 lakh crore would help around 45 lakh units resume activity. The Rs.20,000 crore subordinate debt for stressed MSMEs will pull around 200,000 units out of the downward spiral. The new definition of MSMEs will help them grow in size and avail their respective benefits.

Further, dismissal of global tender of upto Rs 200 crores is a move towards creating a self-reliant India, as it will protect MSMEs from unfair foreign competition, and give them a chance to supply for big projects. Promotion of e-market linkages will help generate profits. All these steps will have a positive impact on the economy by giving a push to the supply side and adding a spur to economic activity.

However, the government failed to acknowledge the fact that given the prevailing uncertainty and absence of a regular supply of income, businesses and individuals might not be very enthusiastic about taking loans in the first place. In fact, even if they do, the dangerous possibility of generating more bad loans in the future would haunt them.

2. Special Liquidity Scheme

Next, under the package, PFC/REC are to infuse liquidity of Rs 90,000 crore to DISCOMs. Also, the Rs 30,000 crore Special Liquidity Scheme will provide liquidity support to NBFCs/HFC/MFIs and create confidence in the market. Under the Partial Credit Guarantee Scheme 2.0 for NBFCs, the first 20% of loss will be borne by the government and will result in liquidity of Rs 45,000 crore. These measures will help boost investment in the economy, which is clearly the need of the hour.

nirmala sitharaman

The Rs 8.01 lakh crore of liquidity measures announced by the Reserve Bank of India are also included in the relief package. These will increase money supply, and hence impact investment and consumption spending positively.

3. Tax Reduction

Other tax measures such as 25% reduction in TDS/TCS rate, along with extending due dates of income tax returns, will result in increased disposable incomes. Reduction of statutory PF contribution as well as extended EPF support will increase take-home salaries of employees.

Though the motive is to increase consumption spending, the most important component of India’s GDP, the much required push on the demand side is still missing. More impactful steps such as decreasing the burden of direct taxes have been left out by the government.

Just like consumption spending, government spending also had the scope of expansion, which this package failed to address.

4. Benefits To The Poor

Various sections of the society have been targeted through the package. The Pradhan Mantri Garib Kalyan package provides one kilograms of pulses for each household for free, Rs 500 for women Jan Dhan account holders, and free of cost gas cylinders — all of this every month for the next three months, besides various other benefits.

Also, the increase in the MNREGA wage from Rs 182 to Rs 202 per day and the efforts to enroll returning migrants are attempts at protecting people below the poverty line in these difficult times. Further, the arrangement of affordable rental housing and free food grain supply to migrants for two months, along with one nation one ration card will prove beneficial.

Additional measures such as Rs 5,000 crore special credit facility for street vendors, credit-linked subsidy scheme for middle income families, Rs 30,000 crore additional emergency working capital funding for farmers through NABARD, and Rs 2 lakh crore concessional credit boost to farmers through Kisan Credit Cards, ensure that everyone from farmers, street vendors and migrants is encompassed under the relief package.

However, in the current situation, where a big chunk of the population is either unemployed or waiting to go back to work, these measures will not be enough. Substantial direct cash transfers to the Jan Dhan or MNREGA bank accounts of these sections would have been a more effective alternative. By pushing up purchasing power and generating demand, it would have helped revive the economy.

5. Relief To The Agriculture Sector

The Rs 1 lakh crore financing facility for agriculture infrastructure projects, Rs 10,000 crore scheme for formalisation of Micro Food Enterprises, Rs 20,000 crore funding for fishermen, Rs 15,000 crore Animal Husbandry Infrastructure Development Fund along with focus on areas such as herbal cultivation and beekeeping: all ensure that the Primary sector gets the intervention it deserves.

Agriculture has also received focus under the package. Through deregulation of trade in several commodities and the formulation of a central law that will allow farmers to sell their produce intra-State freely, the government aims at better price realisation for farmers and to attract investments.

However, in these times of crop losses and added expenditures, increasing the MSP or wavering of loans would have been more impactful rather than fulfilling this demand made by rich farmers and corporate agribusinesses. These attempts to liberalise the agrarian sector along with measures facilitating corporate land acquisition, are a promotion of corporate farming that may reduce small farmers to mere contractual farmers.

Interestingly, agriculture is not the only sector that has experienced pro-corporate reforms. The package also includes other measures to boost privatisation and FDI such as commercial coal mining, privatisation of power and airports, increase in FDI in defense industries from 49% to 74%, promotion of private participation in the space sector and so on.

Is India’s Economic Approach A Shock Doctrine?

This package carries an uncanny similarity to the shock doctrine — a strategy that uses a shock or crisis (such as the ongoing Covid-19 pandemic) to impose an extremely neoliberal economic regime. Is India also on its way to taking advantage of the ongoing pandemic to capture free-market policies that benefit its top 1%?

The relief package is clearly far from perfect, and missed out on various things. For example, the badly Covid-hit services sector including restaurants and the hotel industry, failed to be recognised by the government. Also, in times where millions are being kicked out of their jobs, the package failed to address the issue of unemployment. Labour intensive industries could have been incentivised and areas such as construction, which create a lot of jobs, could have been nudged.

However, despite all the shortcomings, the package carries the potential to revive the economy. At the end of the day, its expected impact boils down to the question of successful implementation.

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Now as an MH Fellow with YKA, she’s expanding her impressive scope of work further by launching a campaign to facilitate the process of ensuring better menstrual health and SRH services for women residing in correctional homes in West Bengal. The campaign will entail an independent study to take stalk of the present conditions of MHM in correctional homes across the state and use its findings to build public support and political will to take the necessary action.

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The long-term aim of the campaign is to develop an open culture where menstruation is not treated as a taboo. The campaign also seeks to hold the schools accountable for their responsibilities as an important component in the implementation of MHM policies by making adequate sanitation infrastructure and knowledge of MHM available in school premises.

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Harshita is a psychologist and works to support people with mental health issues, particularly adolescents who are survivors of violence. Associated with the Azadi Foundation in UP, Harshita became an MHM Fellow with YKA, with the aim of promoting better menstrual health.

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Meri Marzi aims to ensure sensitised, non-discriminatory health workers for the needs of female sex workers in the Suraksha Clinics under the UPSACS (Uttar Pradesh State AIDS Control Society) program by creating more dialogues and garnering public support for the cause of sex workers’ menstrual rights. The campaign will also ensure interventions with sex workers to clear misconceptions around overall hygiene management to ensure that results flow both ways.

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With YKA MHM Fellow Vineet, Sabna launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society. As a start, the campaign aims to begin conversations on menstrual health with five hundred adolescents and youth in Delhi through offline platforms, and through this community mobilise support to create Period Friendly Institutions out of educational institutes in the city.

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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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A Computer Science engineer by education, Nitisha started her career in the corporate sector, before realising she wanted to work in the development and social justice space. Since then, she has worked with Teach For India and Care India and is from the founding batch of Indian School of Development Management (ISDM), a one of its kind organisation creating leaders for the development sector through its experiential learning post graduate program.

As a Youth Ki Awaaz Menstrual Health Fellow, Nitisha has started Let’s Talk Period, a campaign to mobilise young people to switch to sustainable period products. She says, “80 lakh women in Delhi use non-biodegradable sanitary products, generate 3000 tonnes of menstrual waste, that takes 500-800 years to decompose; which in turn contributes to the health issues of all menstruators, increased burden of waste management on the city and harmful living environment for all citizens.

Let’s Talk Period aims to change this by

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.

A Gender Rights Activist working with the tribal and marginalized communities in india, Srilekha is a PhD scholar working on understanding body and sexuality among tribal girls, to fill the gaps in research around indigenous women and their stories. Srilekha has worked extensively at the grassroots level with community based organisations, through several advocacy initiatives around Gender, Mental Health, Menstrual Hygiene and Sexual and Reproductive Health Rights (SRHR) for the indigenous in Jharkhand, over the last 6 years.

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