COVID-19 Lockdown: Protecting the Poor Means Keeping the Indian Economy Afloat

Recognising the strong link between work and poverty, and the crucial role the working poor play in the functioning of the larger economy, it is imperative for the government to roll out adequate measures in order to mitigate the adverse impact of the unprecedented economic inactivity.

A disappointment of Himalayan proportions descended on me after I heard Prime Minister Narendra Modi’s address to the nation on 24 March. He announced a complete 21-day lockdown throughout India, with just a four-hour notice, reminding me of a similar address in 2016 that had preceded demonetisation. Fearing the community spread of COVID-19, many state governments had already taken, suo motu, several drastic steps. Overall, I am certain there could be good reasons for this nationwide lockdown, but what was missing from the Prime Minister’s address was a sense of realism, and more notably, a sense of responsibility on the part of the Government of India towards its citizens in general and the working poor and their families in particular.

What proportion of people in our cities, towns, and villages can afford to survive more than a few days without work and, hence, daily wages? While a few state governments have thought through this crucial question as a key to the very survival of the poor, the much-needed national initiative is yet to emerge in a substantive sense.

Working Poor and the Larger Indian Economy

Initiatives from the national level have to be well-structured and proportionate to the gravity of the situation from the perspective of work and workers. As of 2018, India had about 461 million workers (some estimates put it at 470 million), with 80% of them working in the informal sector, such as in agricultural work and in micro, small, and medium enterprises (MSMEs), with not more than 10 workers. That is a staggering 369 million workers. The remaining 92 million workers are designated as being in the formal sector, but 49 million of them are employed as informal workers and called variously as contract labour and temporary staff, among others[1].

If one goes by the employment status of all workers across India, close to 52% are in the self-employed category, which comes to 238 million, and those with casual labour status come to 24% or 112 million. Together, they constitute 350 million workers who form the core of the national informal labour base. The remaining 19 million workers and the abovementioned 49 million informal workers in the formal or regular economy—that is 68 million workers—also fall under the informal work category, which altogether comes up to 418 million workers or 89% of all Indian workers. Two thirds of all informal workers (or 60% of all Indian workers), totalling 278 million workers, do not even get the Rs. 375 daily wage (or earnings in the case of self-employed individuals) recommended as the national minimum wage necessary to meet their household basic needs at 2017–18 prices, as per a January 2019 report submitted by a committee constituted by this very government (Ministry of Labour and Employment 2019).

The reason for labouring with these numbers is to make a point—simple, but fundamental in the Indian context—that a majority of workers who contribute to the making of the national income belong to the category of the working poor. Most of them negotiate their daily needs through uncertain livelihood opportunities that make them, in the words of humanist–sociologist Jan Breman (1994 and 1997), “wage hunters and gatherers” and “footloose labourers.” Who are these people? Think of the millions of agricultural labourers and poor peasants producing food grains and processed foods for those who have the money to buy them at will, hewers of wood and drawers of water, workers who load and unload goods at scattered points of trade and commerce across our vast nation, rickshaw pullers in towns and cities coming from distant villages, barbers and washer(wo)men, manual scavengers and garbage pickers, street vendors and domestic servants, auto rickshaw and taxi drivers, brick kiln workers and construction workers who migrate from villages to cities and towns in search of work, workers in repair shops and small workshops producing all kinds of cheap consumer articles and consumer durables that end up in corporate warehouses, roadside eatery workers and those in small hotels and restaurants, “security staff” who protect the middle class and the rich in their gated habitats, delivery workers who deliver food and e-commerce packages at the doorsteps of millions of homes and companies, and similar umpteen groups of workers bracketed under the informal sector status. While they form the lower layers of the hierarchical Indian economy, their services are also integrated with the higher layers of the formal economy in myriad ways.

When there is an economy-wide lock down, is it not incumbent on the national government to think of the livelihood and existential issues faced by this massive group of Indians and their dependents? Despite the federal setup of our union, financial resources and the power to allocate these resources are overwhelmingly concentrated with the central government. What is therefore needed in the context of national emergencies, like the current COVID-19 crisis, is a national economic relief policy with countrywide coverage along with flexible clauses that would allow state governments to pitch in with additional resources and schemes. It also should keep in mind that such an initiative is in the larger interest of preserving the macroeconomy, because it will prevent the breakdown of the larger economic system as well as the sociopolitical fabric of the nation.

The Role of Private Sector

The private sector seemed to have realised this when they exhorted the Prime Minister, in their meeting with him on 24 March, to make direct payments to all unorganised sector workers “since they bear the brunt of the severe lockdown measures to arrest the spread of COVID-19 disease.” One of the corporate leaders went to the extent of suggesting that the government should immediately make a payment of Rs 5,000 to all those above the age of 25; a revolutionary suggestion from the neo-liberal corporate world, but understandable, indeed, from the sheer need to prevent a breakdown of the economy.

It is altogether a different matter whether the private corporate sector has pledged enough support to the national effort to combat the current COVID-19-induced economic crisis. That is an issue in itself warranting a substantive, yet separate discussion.

Decisive States and a Guarded Centre

Recognising the strong link between work and poverty and the crucial role the working poor play in the functioning of the larger economy, it is imperative upon the government to immediately implement a countrywide national economic relief package. First and foremost is the free distribution of ration to all ration card holders, eligible for subsidised food, for a period of three months with immediate effect, under the National Food Security Act, 2013 (NFSA). Going by the current population, this figure would be around 183 million households (covering 67% of the total population). Currently, this entitlement is limited to only 5 kilograms (kg) of cereals per capita per month (or roughly 35 kg per household). It would be beneficial for people to not leave their homes more than absolutely necessary if a few more essential items such as sugar/jaggery, pulses, and cooking oil are added to this ration allotment.

As this piece was being written, news emerged that finance minister Nirmala Sitharaman has announced a relief package of Rs 1.7 lakh crore. That is a welcome step, indeed, but it has to be expanded as the situation demands and evolves. Through her announcement, what the government has done is to increase the quantity of cereals from five to 10 kg, but the free-part is only the additional 5kg. The addition of a 1 kg of pulses is a welcome step. The state governments of Karnataka, Kerala, and West Bengal had already announced such a measure. It needs a special mention that the Tamil Nadu government is moving ahead by instituting free ration (cereals, pulses, sugar, and cooking oil) during the month of April 2020 to all ration card households, a substantive measure that will take care of the needs of all working poor, non-working poor, and vulnerable sections of the society. In addition to the above, there will also be a cash payment of Rs 1,000 per ration card. Separately, all auto rickshaw drivers, construction workers, and registered pavement hawkers will get a cash grant of Rs 1,000. Families of migrant workers, construction workers, and autorickshaw drivers have been handpicked by the Tamil Nadu government to provide 15 kgs of rice, 1 kg of dal, and free cooking oil. Arrangements have been made to deliver cooked food to the elderly and the destitute. The highly subsidised Amma Canteens have been revitalised to provide “hot and quality food.”

But, Kerala has also not hesitated in announcing a slew of measures, including most of the measures brought out by the Tamil Nadu government, but more importantly a few additional ones. The Kerala government has announced that all migrant workers who have been officially called “guest workers” would be provided with accommodation and food. The government has also set up special helpline numbers to enable poorer households in want of food to contact the government. This is not just food security, but it is embedded in human dignity. Additionally, the government has announced that the next six months’ social assistance pension to the poor, aged, and differently-abled would be distributed at once and immediately. It is clear that many other state governments, including Haryana, Punjab, Uttar Pradesh, and Himachal Pradesh have announced some or the other relief measures.

Need for Radical Measures

Extraordinary times call for extraordinary measures. It is high time that the central government, using the current situation as an opportunity, instituted some administrative guidelines for protecting the citizens in times of crisis.

Given the precariousness and insecurity of migrant workers across states, it is important to ensure the coverage of this section under a free public distribution programme, which provides them with cereals, pulses, and cooking oil, among other essential items. Those migrant workers who do not have a ration card should be facilitated by the government to get temporary ration cards at the location of their residence. The sight of migrant workers fleeing back to their home states is heartbreaking. With the announcement of a complete countrywide lockdown, they have been stranded across railway and bus stations in the country, and sometimes, literally on the roadside.

The central government should immediately roll out a minimum cash transfer of Rs 5,000 per month to ration cardholders registered under the NFSA. If need be, the state government can add to this amount. This could be done through bank accounts registered under the Jan Dhan Scheme or e-wallet accounts, such as Paytm.

Elders and the differently-abled in poorer households are most likely to face neglect in times of extreme crisis. Those currently receiving the national social assistance pension should be immediately provided with a pension amount of not less than Rs 1,500 per month. The immediate grant of a two-month pension should be treated as the minimum baseline payment necessary to protect the life and dignity of these people, who have toiled their whole life as informal workers under insecure employment arrangements.

Resuscitation of the Local Economy

A complete nationwide shutdown is a practical impossibility, and hence there are certain exemptions. The agriculture, food processing, transportation, and healthcare sectors are the critical ones where extreme restrictions will necessarily force a return to the erstwhile local economy. As a nation still anchored in its small towns and villages, this crisis might even make us realise that the best weapon to fight unbridled neo-liberal capitalist globalisation is localisation of the kind that builds on the local economy, and its resurgence and upkeep. It could also be the way forward to strengthen and nourish the forgotten economy of solidarity and interdependence in our villages and towns. M K Gandhi, who favoured self-reliance in our villages and among neighbours, would acknowledge and agree with such an approach. Kerala’s adoption of such localised and self-reliance measures—with a well-entrenched panchayati raj system comprising 52% women among its elected representatives and supplemented by 42 lakh women from poor and non-poor backgrounds through the organisational network of Kudumbashree—has been helping the state effectively tackle one crisis after another, from floods to health emergencies.

Such a favourable institutional framework may not be there in all of India. But, there is one that should be tapped to the maximum, not just for outliving the COVID-19 crisis, but also for all future crises: the Mahatma Gandhi National Rural Employment Act (MGNREA). Given the need to stay at home for a period of 21 days, a viable strategy would be to release 30 days of wages in advance to all those who registered and also to those who want to register under the scheme. Additionally, the current average wage of Rs 182 per day should be revised immediately, as it is far below the recommended national minimum daily wage of Rs 375. The last announcement of a 11% upward revision in MNREGA wages is very small, especially in this hour of crisis. Such advance payment of wages would help scores of poor to tide over the adverse impacts of the lockdown.

Additionally, restrictions on the type of work permitted under MNREGA should be removed, but food production and processing should be given priority. Work in farming and animal husbandry by small and marginal farmers, who constitute more than 85% of farmers in India, should be permitted under MNREGA. This will also create a sense of solidarity in the local rural economy. A similar public employment programme for urban areas should also be initiated immediately with similar advance payment of wages. The much-needed public work in towns and cities, such as waste management, roadside cleaning, housekeeping in hospitals, and deep cleaning of COVID-19 healthcare clinics and quarantine areas, should be given priority. The ceiling of 100 days of work per household under MNREGA should be lifted and be allowed to find its own equilibrium in this time of crisis.

The day-to-day burden of fighting COVID-19 has fallen on the healthcare personnel mainly in the public sector. There is also a huge contingent of public servants, such as police and civil administration, who are also called upon to work tirelessly to keep order and arrange for essential services. They themselves would need care and support. An appropriate form of public gratitude, in addition to the Prime Minister’s call to clap for the services rendered by workers in essential services, including MNREGA and anganwadi workers and healthcare professionals, is to care for those individuals and their families in this hour of need.

Aiding MSMEs to Keep Economy Afloat

India is a large economy consisting of small units of production and that calls for special attention to vulnerable enterprises that contribute, by official reckoning, to more than one-third of exports and, perhaps, close to half the national income. About 98.6% of these enterprises employ less than 10 workers, of which 95% employ less than five workers. Preventing the collapse of these enterprises in the informal sector is equally crucial to save the Indian economy. They are also the ones who will keep the local economy functioning in the face of this countrywide lockdown. They need hand-holding and special assistance.

A special MSME and SME economic relief package should be rolled out to address their needs. Those involved in food processing, delivery, healthcare, and essential services should be handheld to continue production and rendering of services with interest-free credit and related assistance such as transportation of goods. To begin with, interest-free loans up to Rs 5 lakh to Rs 10 lakh should be extended, with the interest cost borne by the government. This will also energise the downward spiral of the banking system, without affecting its income resources.

The announcement of an additional fund of Rs 15,000 crore for health-related work is woefully small, and is a mockery of the herculean effort that lies ahead to resolve this national crisis. It will keep the public expenditure in India on health at 1.28% of gross domestic product (GDP) stubbornly unchanged, notwithstanding the bombast of making India a $5 trillion economy. This share of public expenditure on health is lower than 1.6% of GDP, which is the average of the poorest countries in the world. That even an existential healthcare crisis does not move the political system to radically rethink this public provisioning of expenditure is a tragedy, and burdens only the poor and vulnerable sections of our vast society. The burden of a social ideology of hierarchical inequality is writ large over the face of India.

I have not deliberately discussed the methodology of mobilising financial resources for the proposed initiatives. There is no need for this nor is there time. A sovereign national government has enormous facilities at its disposal and a myriad number of ways to raise financial and other resources in any emergency. The ideology of fiscal austerity cannot come in the way of a crisis of this magnitude. The need to reallocate resources is an easy option. The national government ought to do “whatever it takes” to tide over this existential crisis.

As I was completing this article, the news of a relief package of Rs 1.7 lakh crore, that is equivalent to 0.9% of the GDP, looks like a small, albeit welcome, step. That the United States under President Donald Trump was compelled to announce a package of $2 trillion, equivalent to 9.3% of its GDP, speaks volumes about the magnitude of the economic challenge posed by COVID-19. We need to fight COVID-19 from a healthcare as well as an economic point of view. These two battles call for a massive mobilisation of money, materials, and political morality rooted in our constitutional democracy.

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