Chotta Package and Live Free or Die

Badi kathin hai dagar panghat ki

Listen, policymaking is tough in normal times. Huge tomes have been written (and not read) yet we get policies wrong. So, anyone working on policy during these times has all my sympathies. To think through possible solutions with so many unknowns while the clock is ticking is really tough. With that caveat out of the way, let us now look at the Rs 1.7 lac crores relief package announced by the FM this afternoon. We armchair critics live for these moments.

I have put the announcement as A(N) and my critique below it as C(N). Quite neat, eh?

A1: First instalment of Rs 2,000 of PM KISAN will be given in first week of April. 8.69 crs farmers will get immediate benefit out of it.

C1: Well, there are questions

  • PM KISAN is already an existing scheme where the beneficiaries get Rs. 6000 per year in three equal instalments of Rs. 2000 each into their Aadhar-seeded bank accounts. Is this over and above the existing scheme? Or, are we talking about expediting the first instalment? Sounds like that. That wouldn’t be a rescue plan. It will be the same old plan
  • We should assume the farmer has other logistical challenges because of lockdown – reaching the mandi with his produce, getting farm hands (April is the Rabi harvesting season), disruption in supply chain for fertilizers, seeds, storage etc. Some thought should have been given to these issues as well

A2: Increase in wage rate from Rs 182 to Rs 202 amounting to increase of Rs 2000 per worker in MNREGA scheme benefitting 5 crore people.

C2: Questions again

  • That’s a Rs. 20 per day increase with the assumption that a worker works 100 days a year. We have a problem on hand for the next 3 months. Where is a worker going to get 100 days of work in next 3 months? I’m not good at math but it will be difficult to fit 100 days into three months even if the months were fairly accommodating
  • Also, the whole point of a shutdown is people won’t step out to work. How will people work in a job guarantee programme in a shutdown?

A3: An ex-gratia amount of Rs 1,000 for next three months available in two instalments. It will benefit 3 crore widows and senior citizens.

C3: But

  • How do we identify the beneficiaries? Most senior citizens and widows still use cash and don’t have Jan Dhan accounts. How will they access this amount and use it?

A4: Ex gratia of Rs 500 per month for next three months for Women Jan Dhan account holders. This will benefit 20 crore women.

C4: Ummm. Good idea. Hint: think more along these lines

A5: Women Ujjwala scheme beneficiaries will get free cylinders for 3 months. Will benefit 8.3 crore BPL families

C5: Good, but

  • A lot of them have already moved back to using chulha for cooking (multiple studies have been done on this)

A6: Women Self Help Groups will get collateral free loan up to Rs 20 lakh from Rs 10 lakh earlier. Impact on 7 crore holders through 63 lakh SHGs.

C6: Magar

  • Why not just declare an interest moratorium for 6 months for this loan? How does mere collateral free loan help? Their livelihoods are impacted, and they will be struggling to service current loans. Why not declare an interest holiday for the existing loans with some kind of a backstop by RBI?

A7: Government of India will pay the EPF contribution both of the employer and the employee put together 24% for next three months. This is for those establishments with up to 100 employees, 90% of them earning less than Rs 15,000.

C7: Hello, what is this?

  • Is that ‘upto 100 employees, 90% of them earning less than Rs. 15,000’ an ‘and’ condition? That is, you must satisfy both to be eligible for this. The minimum wage for most skilled worker is already more than Rs. 15,000 in most states. ‘90% earning less than Rs. 15,000’ would make only those companies eligible that largely employ unskilled labour. Even there it might be a struggle for them to be an organization that has more than 20 employees thereby making them eligible for PF
  • What about the unorganized sector daily wager earner, contract and gig workers? They don’t earn anything during the lockdown. Where’s the plan for them?

A8: For organised sector, EPFO regulation will be amended so that workers can draw up to 75% for their contingency expenditure non-refundable advance or three months of wages in advance whichever is less. This will benefit 4.8 cr workers.

C8: Yaar, that’s my money only. How’s that part of any aid package?

A9: State governments have been directed to use the welfare fund for building & construction labourers which has around Rs 31,000 crore to help those who are facing economic disruption because of the lockdown.

C9: You know what?

  • Most workers have left the 8-10 cities that are construction hubs and gone home to their villages
  • How will Bihar government ascertain who was a construction worker in Bangalore?

A10: Provide insurance cover worth Rs 50 lakh for sanitation workers, ASHA workers, doctors, nurses, paramedics in case they need it as they are on the frontlines of the corona battle.

C10: Ok, tell me more

  • Is this for free or is it at market rates? Includes family? Covers everything or just Coronavirus related ailments (since it mentions ‘in case they need it’)

A11: Over and above 5kg of rice/wheat that is already given, another 5 kg per person will be given free to around 80 crore people through PDS. Besides, one kg of preferred and region-specific choice of pulse will also be given.

C11: Best policy. We have rice and wheat rotting in FCI godowns. This is the best usage for it. Plus, thinking about region-specific pulse is good policymaking. Just look out for unintended consequences.

What’s in a name? That which we call a virus by another name would have screwed us as badly

The U.S. State Department tried pushing the term “Wuhan virus” in a joint statement with other G7 members on Wednesday. This was rejected by other members who then released separate statements. History doesn’t pivot on dramatic events. Those events are mere culmination of minor fires that go unnoticed. This news items feels like one of those minor fires. What dramatic event or pivot of history it will lead up to, time shall bear testimony.

The U.S. shouldn’t be surprised. If you have spent the last three years peddling ‘America First’, running down every single alliance and pacts that you had put together yourself and not cared a whit about your allies; don’t be surprised you find yourself drinking alone in the last chance saloon.

Lastly,

I was checking with a friend this morning on how the other U.S. states (excepting the 25-26 that have declared partial shutdown) are dealing with life. She told me people are still frequenting parks and going to beaches, parties etc. Even a week ago, there were images captured by drones of parties on Florida beaches. A couple of weeks back NYC was still bustling while the case counts were gradually going up. The idea that you should stay in for helping the vulnerable not get the virus is not too difficult to understand. But try telling that to society built on the dogma of individual liberty. “Live Free or Die” is, in fact, the motto of a state (New Hampshire)

I’m always amazed by America.

Like they say, it is the only country that went from barbarism to decadence without an intervening period of civilisation.

2 thoughts on “Chotta Package and Live Free or Die

  1. Salil

    That last line was educational 🙂

    Like

  2. […] like we did yesterday, we will do quick armchair analysis of the relief package. As usual. I have put the announcement as […]

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: