Addressing Covid-19 distress: Package for poor mindful of fisc

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March 27, 2020 3:45 AM

Pales against global examples, part of Rs 1.7 lakh crore relief to be financed from funds meant for states, extant schemes.

Analysts point out that most of the stranded migrant workers in industries like garments lose out on this relief, as they don’t have ration cards in the states where they are working.

The Centre on Thursday pledged succour to the poor and the vulnerable –from BPL families, Jan Dhan account holders and construction workers to organised-sector employees — to cope with a pan-India lockdown in the wake of the Covid-19 outbreak, announcing a relief package of Rs 1.7 lakh crore. But a sizeable chunk of it is expected to come from existing schemes and from funds meant for state governments.

The announcements fell way short of the expectation of a massive package: no commitment yet on regulatory forbearance on loan repayment and NPA classification, and on relief to companies and workers in sectors like tourism, housing, MSME and aviation that have been hit hard. However, finance minister Nirmala Sitharaman said more steps were in the offing to soften blows to various stakeholders and the government would respond to the crisis as it evolved.

At least two of the relief measures — for construction workers and for medical facilities like testing, screening, etc, for Covid-19 patients — are to be provided from an estimated Rs 56,000-crore kitty available under Building and Other Construction Workers Welfare Fund and the District Mineral Fund, both meant for state governments. Also, the front-loading of transfer (about Rs 17,400 crore) under the PM-Kisan scheme in April has already been provided for in the FY21 Central Budget and doesn’t involve any extra cost.

However, the Centre would provide an extra five kg of rice and wheat per month to each person for free under the public distribution system (PDS) for the next three months, Sitharaman said, announcing the slew of decisions. This is estimated to cost the exchequer over Rs 48,000 crore and benefit as many as 80 crore people, covering almost two-thirds of population. Similarly, one kg of pulses per month will be provided for free to each ration card holder for three months.

But analysts point out that most of the stranded migrant workers in industries like garments lose out on this relief, as they don’t have ration cards in the states where they are working. Nevertheless, their family members living in villages will benefit.

A major relief by way of a transfer of a total of Rs 1,500 spread over three equal monthly instalments to 20.4 crore women Jan Dhan account holders will cost the Centre Rs 30,600 crore. Some analysts, however, expressed concern over the transfer to the poor via Jan Dhan accounts, saying many of these have been misused by unscrupulous elements to funnel black money, especially during demonetisation.

The Centre will also offer a one-time grant of Rs 1,000 each to senior citizens, widows and differently-abled people, with an estimated cost of Rs 3,000 crore. To offer some relief to the health workers acting as the first line of defence against the Covid-19 pandemic, an insurance cover Rs 50 lakh will be provided to each of them. This will help 20 lakh workers, including doctors, paramedics and nursing staff.

The government has decided to hike the wage rate under the NREGA to Rs 202 a day from the current Rs 182, with each beneficiary estimated to get roughly Rs 2,000 more per month. As many as 8.3 crore BPL families will be given free cooking gas cylinders for three months under the Ujjawala scheme, Sitharaman said.

To provide a breather to the organised sector that has also been adversely affected by the lockdown, the government has decided to pay the EPF contribution of employers and employees (roughly 24% of their basic wage) for three months for units that employ up to 100 employees, 90% of whom earn less than Rs 15,000 a month. Some 80 lakh employees and four lakh units stand to gain from this move.

The Centre will also amend the Employees’ Provident Fund Regulations to allow employees non-refundable advance of 75% of the amount or three months of the wages, whichever is lower, from their accounts. Families of four crore workers registered under the EPFO can tap this window.

Similarly, around 63 lakh self-help groups (SHGs) run by women will potentially benefit from the government’s announcement to double the collateral-free loan limit to Rs 20 lakh. The Centre said it will ask states to use roughly Rs 31,000 crore available with them under the Welfare Fund for Building and Other Constructions Workers (created under a Central Act) to protect such workers against economic disruptions. As many as 3.5 crore construction workers stand to benefit, it said.

Similarly, it will impress upon states to utilise the funds available under District Mineral Fund (DMF) for supplementing and augmenting facilities of medical testing, screening, treating patients and other requirements in connection with the Covid-19 pandemic. Economic affairs secretary Atanu Chakraborty said around Rs 25,000 crore is available under the DMF.

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