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Rs 20 lakh cr can reboot economy, add jobs, tackle climate change. If there’s political will

Let us for a moment pretend that the Modi government is actually going to raise or save Rs 20 lakh crore and it will use it to reboot economy after lockdown shock.

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Rs 20 lakh crore is a lot of money for a country like India. This translates into a little over Rs 15,000 rupees per person and a little less than 10 per cent of our GDP. That’s more than what anyone expects the Narendra Modi government to deliver, more than what many economists and activists had asked for. Prime Minister Modi’s critics would have little to complain if the ‘economic package’ he announced in his address to the nation Tuesday has the same meaning as these packages have all over the world: additional money, over and above the routine expenditure, that the government spends for a specified purpose.

Sadly, this is a big if. You would be very naïve to believe this figure, given the track record of this government on fudging, padding and inventing budget sums. If Arun Jaitley was known for his creative accounting, Nirmala Sitharaman would be remembered for economising on truth.

Let us decide to be naïve. Let us pretend that the Modi government is actually going to raise or save Rs 20 lakh crore over and above what it had announced in the budget. Let us overlook analyses of unrealistic revenue targets in the budget and reports of sharp fall in revenue and disinvestment proceeds. Let us also assume that the government would like to spend this package on rebooting the economy to deal with the lockdown shock. Let us limit ourselves to a simple question: What can the Modi government do with this kind of money?


Also read: Modi’s Rs 20 lakh-crore package will help India’s economy only if it reaches the states


Dividing relief

There is a simple way. If you leave out the top 35 crore of the Indian population, the remaining 100 crore people could be handed over Rs 20,000 each. An average family of five could be given a cheque of Rs 1 lakh, which works out to more than the annual income of half of these families. The other, wiser, route is to spend the money in such a way that generates economic activity, helps the poorest families and meet other societal objectives like climate resilience.

That is what Table 1 suggests. It divides our requirements into four parts. First includes the most urgent and pressing needs of relief and disease containment. The second part is for addressing the massive unemployment problem in a way that also helps India protect itself against climate change and environmental degradation. The third part is to be used for providing stimulus to those sections of economy that need it most. The fourth is one-time support that the state governments have been pleading for.

Table 1

Graphic by Soham Sen | ThePrint

The first part is quite straightforward, predictable and easy to compute. If the central government decided to pick the tabs for one way transport of workers back home, the cost (for 30 days, 300 Shramik trains per day) to Indian Railways would have been just around Rs 900 crore. Similarly, assuming that about 10 per cent of our population is going test Covid-19 positive, providing high quality and free testing, medical care, quarantine and free hospitalisation of all patients along with expansion of the capacity of public hospitals to handle this crisis would need somewhere close to Rs 1.5 lakh crore.

The last component in this part, namely providing people with food security would cost much more, though most of it will be notional because the government has already procured rice and wheat stocks. Food rights activists have demanded the central government supply 5 kg additional food grain (which the finance minister had announced earlier for three months), 1.5 kg dal (the finance minister had announced just 1 kg for the entire family) and 800 ml cooking oil per person per month for the next six months. We can add 500 gm sugar and a bar of soap per person per month to this package. These benefits should be extended not just to 80 crore people with ration cards, but to another 20 crore as well, whose names should have been added earlier. An additional budget of Rs 2.2 lakh crore for food security at this critical juncture is hardly a high cost for warding off hunger.


Also read: Modi announces Rs 20-lakh crore package to revive economy and a ‘new look’ lockdown 4


Expanding jobs for rural and urban India

The second part of this plan is not just about providing people employment but about utilising this opportunity to prepare India against a similar crisis in future. This can take the form of two separate missions for rural and urban India.

Several scholars and activists have already demanded an expansion of MGNREGA by raising the number of employment guarantee days from 100 per year to 100 days per person (or better, 200 days per year per family) and allowing new cards to be made on the spot. The best way of using this labour force would be to engage it in the largest-ever mission to make the country climate change resilient. That would involve the creation of 10 lakh small water storage or harvesting structures, irrigation ponds, up-gradation of water distributaries, conservation of forests, grasslands, wetlands, coasts and promotion of agroforestry. At an additional cost of Rs 75,000 crore, this mission would save 10 crore rural families from falling into destitution, besides its massive ecological gains.

A similar mission for urban India has been proposed by economists at Azim Premji University Bangalore. The idea is to engage urban unemployed youth for at least 100 days (I suggest a modest wage of Rs 400 a day, lower than what the economists recommend) in various green jobs such as protection and regeneration of water bodies, water harvesting, drainage, recovering urban common spaces, green spaces, carrying out health survey, care of elderly, solid waste management and sanitation. This could help address the pollution crisis of our towns and cities, besides offering the much-needed bridge to the temporarily unemployed at a cost of Rs 1.3 lakh crore.


Also read: Slowing infection, better recovery but mixed bag in states: What India gained from lockdown


Helping MSMEs and boosting demand

The final mission in this plan comprises measures to boost rural economy so as to absorb at least part of the reverse migration into meaningful and profitable activity in the villages. This would involve helping farmers with price realisation, reducing their debt burden, supporting nature-related and other small scale manufacturing in rural area. An initial push in this direction would cost Rs 2.5 lakh crore and should give the much-needed demand push to the economy.

The third part comprises a stimulus package for entrepreneurs. Here, too, the smartest way to kick-start the economy would be to begin at the bottom with self-employed micro-entrepreneurs like hawkers, vendors and shopkeepers who constitute an overwhelming majority of enterprises in India. Economists suggest that since these enterprises are usually not registered anywhere, the best way to support them is to add cash credit limit of ‘shishu’ MUDRA loans and provide overdraft facility on Jan Dhan accounts. Small and medium industries can also be supported by providing them with additional cash credit limit and government guarantees for their loan.

Instead of exempting factory and industry from all labour laws, it would be much better to exempt the MSME sector from the Inspector Raj for at least one year. The stimulus package should include that part of the salaried class that is vulnerable because it does not enjoy job security and other benefits of the organised sector. They should be supported with modest unemployment allowance in case of retrenchment. SMEs should be offered subsidies so that they can keep workers on their rolls despite slow down or recession. The stimulus package should contain not just moratorium on debt payment but also a waiver of interest for this period.

Add another 2 lakh crore for stimulus for various sectors of economy (hospitality, transport, etc.) that have taken a big hit during the lockdown. All this adds up to a total of Rs 12 lakh crore. That still leaves about Rs 8 lakh crore to be transferred to state governments to compensate them for their loss in revenue and additional expenditure due to lockdown. All the state governments have been desperately requesting the Centre for this assistance. This one item can go a long way in enabling state governments to devise their own ways to revive the economy.

Rs 20 lakh crore is a lot of money in India. Provided there is a coherent plan to use the money for those at the receiving end of the lockdown shock. Provided we have some transparency about this money. Provided the money is there, and not in thin air. Provided there is a political will.

The author is the national president of Swaraj India. Views are personal.

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16 COMMENTS

  1. What is the credentials and proven success story of Mr Yadav. On every subject he has his “expert views” . He is a Predident of a party who
    has not won even a single Municipality election. Yet channels after channels/print media call him as an expert commentator- he is a hoax and fraud. Media itself is loosing its credibility.

    • Your chacha Modi was also made directly chief minister by RSS, not that he fought election on his name. Modi didn’t ever fight election for a Panchayat ward. That would be like making me PM once then I too will see Indian voters. Yogendra Yadav, on the other hand, don’t have crutches like Sangh and hindutva. Modi is not an empty shell: because he is full of bigotry and nothing else. He is an ill omen for India at best. 3000 crores on a statue where people don’t have food to eat. Whenever you ProudPeople boast of your proudness, it becomes immediately clear– how ashamed are you about yourself and your vesion of idea of india.

  2. The most of theburden is on the banks. centrla government is not opening it’s chest. all these laons become NPAS and PSB swill be blamed for the NPAs. Then call the dog mad and kill it.

  3. Readers are aware of some highly significant developments beginning 12 May , 2020 , particularly relating to economic sector in India. Prime Minister Narendra Modi announced on 12 May , 2020 a consolidated economic package amounting to a huge Rs.20 lakh crores in the wake of the coronavirus pandemic . The theme outlined is to make a self-reliant India by promoting local businesses. In other words , it is a gigantic or elephantine endeavor to promote indigenous business in India. Prime Minister shared with the nation on 12 May the huge pain brought by the coronavirus pandemic , adding that it has given signals of opportunity as well. Details of said rupees 20-lakh crore package were to be given by Finance Minister Nirmala Sitaraman. And these details have been announced by the Finance Minister on 13- 14 May 2020. Briefly speaking , the thrust of the economic package can clearly be read to address the setback or damage done so far and can be done in days to come , by coronavirus pandemic , widely known as COVID-19. In addition , the thrust can also be read to signify a well-meaning endeavor to seize the opportunity that is perceived having come along with the unprecedented pain. In the context of these unforeseen developments on India’s horizon , it may be apt to refer readers to this Vedic astrology writer’s predictions capable of being parked into “ prophetic predictions”. Through this writer’s predictive alerts in article – “ Predictions for coming year 2020 by kushal kumar” – published last year 2019 on 10 October , at theindiapost.com/articles/predictions-for-coming-year-2020-by-kushal-kumar/ , this writer had said like this :-
    “ Now something encouraging. The second half of the year from July to November 2020 looks to be addressing the setbacks or delay of the past , particularly those of the first half. Some trends of success or forward movement in economic sector , political issues are likely. Cooperation or support of global powers may be seen coming. Some historic political decision is likely. The obstructive forces may weaken to some extent. Like the previous year , acceptance by global community of India’s positive role in world affairs may be in news. It seems the second half in 2020 can boost up the ambitious side of the nation. Such knowledge or stuff related thereto as Yoga , Ayurveda , herbal , and spiritual side addressing material issues like health. Efforts made in the economic sector or space program are likely to meet with success bringing name”.
    It may be observed here that whatever endeavors or announcements have been made in May and onwards would obviously take some reasonable time to shape up on the ground. Hence July to October or November 2020.

  4. Mr Yadav has arbitrarily arrived at numbers to be allocated under various heads. He will find that some of his recommendations are included in the package. However, this is not the point. In order not to burden the treasury and to prevent the fiscal deficit going out of control, almost the entire burden is placed on the banking industry. Banking industry being subservient to the government cannot refuse. But how it will affect the health of the industry already suffering from mounting NPAs is the moot point.

  5. Congratulations, Team India 125crs plus one India one world mission for peace and love wish As we are to leave with corona and other diseases company why not take a permanent solution for every day problem with a ever lasting solution. Let’s not pretend and assure but let’s really predict that happening and cost suggests deliver in truth As every one on home mode and to stay home now you open lockdown or step by step bring back to normal will require social Basis security to government quarantine for bank loan to CASH support as all measures full of scheme and program have results in till to settle. Let not predict future let’s make we have maximum Bank account Aadhaar link let’s deposit the amount and same time give Rs 500/Insurances cover for One Crs to each head so family is secure and safe and will help in social Basic security hope as corona has changed life so government can also bridge the gap between economy and self relaent India. Okay

  6. What has happened now why not after first pandemic lockdown. Every one might say Modi has this & that . But forget not the Economy was actually rebooted & globalised by Narasimharao & Manmohan Singh, then & then after progress of economy & development started.Man Mohan Singh while he was a PM reorganised the economy, when the whole world under recession, Indian Economy came out successfully.
    Infact NM gets everything ready made Economy, Bufferstock of foodgrains for 10 years. Actually speaking Modi after demonetisation lost the tone of economy, momentum. But he is lucky to get a chance like Uri, Balakote & now Corona.
    He declared the economic package late in time, what the people facing at ground reality is unknown to BJP . As it seems at first hand. Yet it’s not everything, it’s starting. Not the end.

  7. Congrass ensured that undereducated ” jhollawallas” were used as intellectuals to decide policies which promoted corruption, nepotism and a huge population that ensured majority will remain poor and corruption will go on unchecked. These same middlemen are now increasingly sounding desperate for INDIA to return back to congrass to ensure survival of the “jhollawallas ” gang. SUPPORT population control if you any humanity left in you.

  8. This Government has dug itself deeper, and deeper into the hole that successive Indian Governments have dug for India since 1947.
    Modi’s 20 lakh crore Keynesian-Rooseveltian Jhumla cannot succeed because India’s economy has already been run into the ground by destroying the productive and productivity to feed Modi’s “For Government, By Government, To Government”, “Multi-Appeasement” policies. All Modi is proposing is to stoke inflation through deficit finance, leading to the collapse of the rupee and the economy in order to sustain and perpetuate a failed Government that has further fattened the preexisting accumulation of unproductive capital, non existent assets, and the exploding ranks of incompetent, corrupt Judges, Politicans, Bureaucrats, Police, Public Sector and others on State pay roll.
    There is no way that India can generate the sort of productivity and quality goods and services to compete Internationally to run up the sort of surplus to fill the contemplated deficit even over several centuries. India policies since 1947 to 2020, its Constitution, Courts and laws have seen to this. It would have taken a century after India puts an end to corruption and reservation for it to begin to have a fighting chance. It may take several centuries now to pay off the debt Modi contemplates. Modi’s policies will suck the blood of many generations of Indians to come with far greater viciousness than Nehru and his successors!
    I have no faith or confidence that the present Government will do anything other more of all the failed policies since 1947 which it has implemented with greater fanfare and technology assisted viciousness since 2014.
    I had predicted this right since 2014 in hundreds of answers on Quora
    Note from my archives of Modi’s “Multi Appeasement”
    Modi’s “Multi appeasement policy” comprises:
    (1) Appeasing with doles, increments and pampering of Moslems, Christians, SC, ST, BC, OBC, Judges, Bureaucrats, Police, Politicians, Public Sector and Crony (election bond) Capitalists at the cost of the rest of the Nation
    (2) Bribe diplomacy of giving doles and aid to countries in competition with a far wealthier and more powerful China at the cost of Non VIP Indian citizens and India
    (3) Appeasing China by running up a trade deficit with China larger than India’s defense budget and taking advantage of India’s woeful lack of indigenous ability and capacities in governance, science, technology, integrity, quality and engineering to purchase arms from the remaining four Permanent Members of the UN Security Council with scant regard for India’s best interests in terms of economy, value for money, military strategy, tactics and readiness
    Please read:
    https://www.quora.com/What-are-the-steps-that-the-Indian-government-is-going-to-take-to-boost-the-economy-post-lockdown/answer/Suchindranath-Aiyer?__nsrc__=4&__snid3__=7988948174
    https://www.quora.com/How-will-India-cope-post-lockdown-economically/answer/Suchindranath-Aiyer?prompt_topic_bio=1
    https://www.quora.com/Which-previous-Prime-Ministers-of-India-can-handle-the-corona-virus-situation-better-than-Narendra-Modi/answer/Suchindranath-Aiyer?prompt_topic_bio=1
    https://www.quora.com/How-can-Indias-manufacturing-industry-capitalize-on-the-production-decline-in-China-due-to-the-Corona-virus/answer/Suchindranath-Aiyer?prompt_topic_bio=1
    https://www.quora.com/What-measures-is-the-Indian-government-taking-to-attract-manufacturing-companies-moving-out-of-China/answer/Suchindranath-Aiyer?prompt_topic_bio=1
    https://www.quora.com/What-do-you-expect-in-todays-speech-from-Indias-finance-minister-Mrs-Nirmala-Sitharaman-at-4-pm-on-May-13-2020-on-the-economic-package/answer/Suchindranath-Aiyer?prompt_topic_bio=1
    https://www.quora.com/Is-202020-twenty-lakh-crore-in-2020-by-centre-welcoming-to-pave-away-unemployment-by-encouraging-MSMEs-and-make-India-products-Note-your-views-may-be-furnished-after-nirmalajis-speech-addressed-to-nation?__filter__=all&__nsrc__=1&__sncid__=5108089938&__snid3__=8172264320

  9. This Government has dug itself deeper, and deeper into the hole that successive Indian Governments have dug for India since 1947.
    Modi’s 20 lakh crore Keynesian-Rooseveltian Jhumla cannot succeed because India’s economy has already been run into the ground by destroying the productive and productivity to feed Modi’s “For Government, By Government, To Government”, “Multi-Appeasement” policies. All Modi is proposing is to stoke inflation through deficit finance, leading to the collapse of the rupee and the economy in order to sustain and perpetuate a failed Government that has further fattened the preexisting accumulation of unproductive capital, non existent assets, and the exploding ranks of incompetent, corrupt Judges, Politicans, Bureaucrats, Police, Public Sector and others on State pay roll.
    There is no way that India can generate the sort of productivity and quality goods and services to compete Internationally to run up the sort of surplus to fill the contemplated deficit even over several centuries. India policies since 1947 to 2020, its Constitution, Courts and laws have seen to this. It would have taken a century after India puts an end to corruption and reservation for it to begin to have a fighting chance. It may take several centuries now to pay off the debt Modi contemplates. Modi’s policies will suck the blood of many generations of Indians to come with far greater viciousness than Nehru and his successors!
    I have no faith or confidence that the present Government will do anything other more of all the failed policies since 1947 which it has implemented with greater fanfare and technology assisted viciousness since 2014.
    I had predicted this right since 2014 in hundreds of answers on Quora
    Note from my archives of Modi’s “Multi Appeasement”
    Modi’s “Multi appeasement policy” comprises:
    (1) Appeasing with doles, increments and pampering of Moslems, Christians, SC, ST, BC, OBC, Judges, Bureaucrats, Police, Politicians, Public Sector and Crony (election bond) Capitalists at the cost of the rest of the Nation
    (2) Bribe diplomacy of giving doles and aid to countries in competition with a far wealthier and more powerful China at the cost of Non VIP Indian citizens and India
    (3) Appeasing China by running up a trade deficit with China larger than India’s defense budget and taking advantage of India’s woeful lack of indigenous ability and capacities in governance, science, technology, integrity, quality and engineering to purchase arms from the remaining four Permanent Members of the UN Security Council with scant regard for India’s best interests in terms of economy, value for money, military strategy, tactics and readiness

  10. Pappu Mummy…… all are silent after yesterday’s massive, well designed and well targeted stimulus announcement.

    • He is a champagne socialist commie. Don’t be fooled by the pained look, the khadi kurta and the zhola- the guy is a total fake.

  11. Recipe for inflation and possible disaster. Most to the money should go funding Primary Education, Heath Centers, tap water and other ifra projects no no no to consumption

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