Coronavirus Lockdown: Government Is Being Tardy And Hesitant On Economic Relief, Says P Chidambaram
The shortest-term economic consequence of the 21-day nationwide lockdown will be on the livelihood of India’s poorest, said Congress leader and former Finance Minister P Chidambaram.
“Poorest Indians need cash in their hands,” he said, and Prime Minister Narendra Modi’s government should not delay the announcement of a relief plan any later than tomorrow, he told BloombergQuint in an interview.
Chidambaram, who has been in favour of a complete lockdown to curb the spread of the novel coronavirus in India, has recommended a 10-point plan to offer relief to those worst hit by the economic shutdown—daily wagers, workers in the informal sector and rural economy - as well as measures for businesses.
- Double amount payable under PM KISAN (to Rs 12,000) and transfer the additional amount immediately.
- Bring tenant farmers under PM KISAN and transfer Rs 12,000 to their bank accounts.
- Transfer Rs 3,000 to the bank account of each NREGA worker.
- Transfer Rs 6,000 into Jan Dhan accounts of urban poor.
- Give 10 kg of rice or wheat free to every ration card holder in 21 days.
- Ask all registered employers to maintain current levels of employment and wages. The government should reimburse those costs.
- Ask others left out (street dwellers, etc.) to register in every ward, open bank accounts for them and transfer Rs 3,000.
- Extend tax payment deadlines. Ask banks to lend to panchayats, municipalities and corporations against tax receivables.
- Ask bank to extend date for any EMI payment to June 30.
- Cut GST rates by 5 percent on all wage goods, essential goods and services and good of mass consumption for April-June.
These measures will cost Rs 5-6 lakh crore, said Chidambaram, the bulk of which (Rs 2.5-3 lakh crore) can be contributed by the central government and the rest by states.
The central government will spend nearly Rs 30 lakh crore in financial year 2020-21 and states put together will spend Rs 40-45 lakh crore. Rs 5 lakh crore can be easily carved out of this overall budget by “cutting out wasteful or redundant expenditure”, Chidambaram said. Expenditure on the space program or the bullet train can also easily be deferred to another year, he added.
Time Is Running Out
“This is no time for timidity,” he said, urging the government to announce relief measures immediately. In a national address on March 19, Prime Minister Modi announced the setting up of an economic task force to consider relief and stimulus measures for the economy. He has since addressed the nation again but has not made any announcements in this regard. Finance Minister Nirmala Sitharaman has said the government is meeting stakeholders and compiling recommendations.
The government is thinking too much or not thinking enough. It’s being tardy and hesitant. This is no time for timidity, we should be able to announce a Rs 5-6 lakh crore package without taking so much time.P Chidambaram, Former Finance Minister, Indian National Congress Leader
The former finance minister expects that cash transfers to the poorest can be done in 48 hours via Aadhar-linked bank accounts. As for free grain, India’s food stocks are far in excess of the buffer norms and grains can be distributed through ration shops in less than a week, he proposed.
Once cash and grains are in the hands of the poor, they will observe the lockdown with far more discipline.P Chidambaram, Former Finance Minister, Indian National Congress Leader
Besides these short-term measures, the government should focus on strengthening health infrastructure in the medium term. Issues like sanitation, drainage and clean water need to be immediately addressed.
“The coronavirus is a wake-up call for us to address issues that have been neglected for many years,” Chidambaram said.
Watch | P Chidambaram in conversation with Menaka Doshi here