Who should be saved first --Modi's dilemma
By Vijaya Pushkarna
Telephone conversations -- there are no drawing room conversations these days—among people with certain interests have one common wish from Prime Minister Narendra Modi ---that health spending ought to be prioritised, and that fixing an economy already under terrible slowdown can wait.
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With folded hands, PrimeMinister Modi asked people to stay home for the next three weeks, not to cross the Lakshman Rekha he has drawn around every Indian home. |
Telephone conversations -- there are no drawing room conversations these days—among people with certain interests have one common wish from Prime Minister Narendra Modi ---that health spending ought to be prioritised, and that fixing an economy already under terrible slowdown can wait.
His announcement of a total
three week curfew like lockdown of the
country beginning March 25 was widely hailed, with senior Congress leader and former finance and home Minister P Chidambaram being
among the first to welcome it, saying “I told you so”.
While some quarters were disappointed that the Prime Minister did not announce relief for those who
have been hit by job losses, there was relief that a Rs15000 crores immediate
fund was announced for Covid19 induced healthcare needs. The Prime Minister is
not expected to mention the nitty-gritties like relief for different
sections, Direct Benefits Transfer, free rations, etc , but only indicate the
broad direction he is taking the country towards.Finance Minister Nirmala Sitharaman will address some or all these issues sooner than later.
But fact is, people are asking --save the
economy, or save the people from the killer virus? Like the filmy, "Do we save the mother or the child?" That is simply not the issue.
The problem is how do we save both. And daunting as that may sound, experts
suggest it is possible to do both, by acting right away.
There are enough takers for the idea that more
people may die on account of income loss than of the deadly virus if we do not
act quickly. This suggests that the
Government of India will need all our backing to do the fine balancing between
saving people and saving the economy, more so given scarce resources , huge population
and time running out--for the economy and the people.
The truth is the economy is taking the brunt of COVID 19 just as human beings are, with many sectors already
feeling the impact of it and grinding to a halt.
A pilot with Air India had told
us many months ago that their salaries were being horribly delayed, resulting
in him delaying on EMI payments, resulting in penal interest.
Now things have
only worsened as all airlines have to pay to park their fleet. Hotels had no guests or walk in diners at their restaurants and coffee shops for more than a month now, and some
are even spending on fumigation and sanitizing on an unprecedented scale.
Tourism...are we joking? Do we want the green bucks and those who bring them?
The automobile manufacturers and cell phone assemblers have only formally shut
shop, albeit temporarily. Their productivity tapered down right when Wuhan came
under lockdown, and Chinese goods became untouchable—literally. Retailers, fleet operators,real estate,
financial services that include insurance, capital markets,steel,cement and all
manufacturing, all started feeling the heat as demand contracted.
Imagine if when the virus tsunami is behind us, all we have is just death, devastation and destruction, no skilled people, and no growth story to resume?
Nipun Sahni, Partner at
Apollo Global Management, says unprecedented events like these need
solutions that "don't go by the playbook and should not be based on norms.
" Neither should they be small incremental steps as the impact is minimal
and does not solve the problem-- just as we cannot use buckets of water to
douse a huge fire. The economic risk , he maintains, is as big as the health
risk, and in what may sound like music to Prime Minister Modi's
ears, Sahni believes attending to the economy under virus threat is
crucial to realising the goal of India becoming a $5
trillion economy by 2025.
Outlining a six-point action plan, Sahni
says they are "simple, easy to implement, equitable, transparent
and can be announced and implemented before 1st April,2020.
The plan includes solvency measures, direct
compensation benefit of Rs 7500 per person per month for three months
beginning April to employees to prevent job losses, on tap liquidity to MSME
and Medium size corporates, on tap liquidity to corporates with annual turnover
greater than Rs50 cores, and fiscal and monetary incentives for encouraging
investment from individuals and businesses for the next two years.
And how much will all these cost? What about the funding?
Sahni' s calculation is $40-50 billion or 2 %
of the GDP. About 60 to 65 % of this will be in the form of enhanced credit
support for businesses and the remaining to support employee compensation in
sectors impacted by COVID 19. He has mooted the idea of funding this by issuing
a new category of tax free "India Pragati Bonds" with maturity period
of 7,10 and 15 years.
"These measures can be implemented at
short notice and are by no means comprehensive and. all encompassing. An early
announcement of these measures will put money in the hands of those who need it
thereby giving hope to millions of citizens and businesses ",
says Sahni.
Tailpiece
The “chaiwala”
has become a romantic idea over the last few years, and none less than the
Prime Minister has confirmed that it is a job, no less. But the countless
workers in the unorganized sectors --the rickshawalas, auto drivers, chaiwalas,
plumbers, electricians, dhobis, domestic helps, drivers, barbers, beauticians, florists
,courier and other delivery boys etc etc-- are actually numberless. The
government has no database on these informal sector workers.
The government has said as much in Parliament,
where they said a committee has been formed to arrive at the number!
In a press release isssued yesterday, Tapan
Sen, General secretary of The Centre of Indian Trade Unions (CITU) has put the figure at 93 % of all Indians who are
working--meaning receiving a remuneration.
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