Amidst Coronavirus Lockdown, India Becomes Socialist for 3 Months

Nirmala Sitharaman’s relief package for the poor could well become the blueprint for government welfare spending.

It has taken a deadly global contagion for India’s government to admit that six out of every 10 Indians are poor, and they need free food. That’s the central thesis of Finance Minister Nirmala Sitharaman’s announcements today. The most important move is the decision to give 5 kilos of rice or wheat free to 80 crore Indians, every month, for the next three months.
The FM said this is going to be over and above what India’s 23-crore ration card holding families already get. In fact, the entitlements under the public distribution system itself have been changed, for the next three months. Now, as Prakash Javdekar announced on Wednesday, 80 crore people will get a total of 7 kg of rice and wheat at hugely subsidised rates – rice at Rs.3 per kg instead of Rs. 37 per kg, and wheat at Rs.2 per kg instead of Rs.27 per kg.

Fighting Hunger During Coronavirus Lockdown

If you add the two, it means a family of four will get a total of 48 kg of rice and wheat per month. If the family only buys rice - which is more expensive than wheat – it will pay a total of just Rs 84 a month. This will work out to a daily availability of 400 gms of rice per person. That’s about 1500-1600 calories per day for just 40 paise a day.

Each family will also get one kilo of dal for free, every month, for the next three months. This is not much, since you need at least 80 grams of dal per meal for a family of four, even if it is turned into a thin soup. A kilo will yield 12 meals, or one serving of dal every five meals. Each meal will yield about 5 grams of protein, which is less than 10% of what an adult needs per day.

So, the poor will need to buy proteins from the market to meet some of their nutritional needs. Where will this money come from, if they don’t get paid during the 21-day lockdown? PM-KISAN, is being frontloaded. The first instalment for the year, has already been paid late last month, which means the next instalment would have come towards the end of June. Now, 8.69 crore farming families will get their second instalment of Rs 2,000 in the first week of April itself.

Diverting Welfare Funds to Put Cash in Hand

20 crore women from poor families, who have no-frills bank accounts under the JanDhan Yojana, will get Rs 500 per month, for the next three months. Many poor families would also have old parents, while others would have widowed mothers. Three crore such people will get Rs 500 per month for the next three months.

The lockdown has also meant that millions of construction workers have had to leave the cities and go back to their villages. They might end up with some cash as well. The centre has directed state governments to utilise welfare funds collected under the Building and Construction Workers Cess Act to help construction workers who have lost work due to the coronavirus outbreak. On Wednesday, Labour minister Santosh Gangwar said the total funds amount to Rs 52,000 crore. Ms Sitharaman today said it is about Rs 31,000 crore.

If the entire amount is transferred to the 3.5 crore registered construction workers, each will get anywhere between Rs 8,000-14,000 over the next three months.

Note that this money is not just for the 21-day lockdown period, it goes way beyond that. Perhaps, this is an acknowledgment, by the government, that the economy is going to nosedive for at least a quarter, and the poor will need food and financial aid throughout the period.

Significant Relief for Workers in Organised Sector

We might see the government augment its MGNREGA expenditure after the lockdown is over. That could be one reason why MGNREGA wages have been marginally increased by Rs 20 per day. The FM said, it will help about 5 crore workers get an additional Rs 2000. Of course, that extra money will be spread over 100-days of work over the entire year. In effect, it means an additional spend of Rs 10,000 crore, even if the total planned workdays remain the same.

About 4.8 crore workers registered with the EPFO will also be given significant relief. The government will pay both theirs and their employers’ provident fund contribution for the next three months.

This will probably mean that their take-home wages will increase over this period, if they continue to be employed.

For those who lose their jobs, at least their PF accounts will continue to receive funds.

So, for the next three months, about 60 per cent of Indians will get more food at lower prices. They will also get some free cash to buy vegetables and proteins to improve their nutrition. And, 8.3 crore families or about 40 crore people will also get free LPG cylinders to cook their food.

This, perhaps, is the biggest welfare move we have seen since MGNREGA was introduced more than a decade ago. While, it has been triggered by the Coronavirus threat, if it works, it could well become the blueprint for government welfare spending for some time to come. Till then, India’s poor will benefit from three months of socialism.

(The author was Senior Managing Editor, NDTV India & NDTV Profit. He now runs the independent YouTube channel ‘Desi Democracy’. He tweets @AunindyoC. This is an opinion piece. The views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)