PM Garib Kalyan Yojana falls short on relief (The government scheme needs to be adjusted properly)

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 PM Garib Kalyan Yojana falls short on relief (The government scheme needs to be adjusted properly)

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• Disrupted lives: The COVID-19 lockdown has totally disrupted life in India, and impact on livelihoods and businesses is severe. The Rs.1.7 lakh cr package by Finance Minister Sitharaman covers many aspects – enhanced food quotas under PDS, higher wages under MGNREGA, free LPG under Ujwala, etc.
• PM Garib Kalyan Yojana: This package covers cash transfers under PM-KISAN scheme (to farmers), cash for senior citizens and handicapped people, and Jan Dhan account holders.

1. Cash and food components will mitigate anxiety somewhat but the economic stress will not go away
2. PM-KISAN transfer of Rs.2000 to 8.7 crore farmers is simply front loading of payments due later
3. The MGNREGA wage revision by Rs.20 was also overdue, and will take effect from April 01, 2020 (total Rs.2000 cr outgo annually) – what about social distancing while we expect workers to come for MGNREGA? Can we give them cash without work?

• Tight revenue position: The govt. may be worried about poor fiscal strength, and hence delaying a bigger relief package. That can send worries down the economy's spine. So the govt. must immediately announce that fiscal deficit won't be a criterion now.
• How to redraw the annual budget: Funds need to be rearranged and reallocated now.

1. The CSS (centrally sponsored schemes) take upto Rs.3.4 lakh crore annual. Halt these schemes for the 2020-21 period, and transfer them as cash to poor and vulnerable.
2. Stop all pay and pension hikes for govt. employees (as per 7th Pay Commission grants) as that based on 7% GDP growth rate estimates.
3. Widen the fiscal deficit and let RBI monetise it. The lockdown has depressed demand, so no risk for inflation either. Only price rise will be due to supply side problems, that has to be handled administratively.
4. Monetising deficit may not be needed if Budget allocations are changed.

• Where to spend: The migrant informal sector workers accounting for 90% of India's workforce were not given anything directly. They are not entitled to PM-KISAN or MGNREGA. The organised workers relief package (80 lakh workers) via EPF contribution load-sharing by GoI too is not for these people. They only get the PDS foodgrain relief.

1. Do not let the migrant workers go back to villages. House them in neat and clean camps with proper supplies, along the highways itself.
2. Ensuring supply of essentials in rural India will help in a big way, as supplies have been disrupted.

• Summary : The PM Garib Kalyan scheme has left out the migrant workers, and targeted cash and in kind support is now needed.

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