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Govt India's festival package selective, 'ignores' vulnerable rural, urban workers, migrants

Counterview Desk

Well-known civil rights organization, NREGA Sangharsh Morcha, has regretted that the Government of India-announced stimulus package “has chosen to, once again, ignore the plight of the most vulnerable population which has been hardest hit by the sudden lockdown – the rural and urban workers of the country” – even as distributing festival vouchers to a select few.
Pointing towards how how the pandemic and the sudden lockdown led to “unprecedented hardships for the rural and urban workers of the country”, a Morcha statement sought from the government “immediately double the MGNREGA budget to Rs 2 lakh crore and increase the number of days to 150 days per household” in order to boost demand in the economy.

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The Indian Economy is at an all-time low with GDP having shrunk by nearly 24 percent. In his 1936 book, “The General Theory of Employment, Interest and Money”, John Maynard Keynes had proposed that countries could return to high economic growth by boosting aggregate demand through an increase in Government spending. This Government spending would then create demand for goods and services which would kick start a virtuous cycle of demand, investment (to meet this demand) and growth.
To boost consumer demand and revive India’s ailing economy, on October 12, the government announced a stimulus package. This included things like
  • a one-time INR 10,000 crore ($1.36 billion) interest-free festival advance to all its employees
  • cash vouchers to central government employees this year in lieu of leave travel concession benefits. Government employees can use cash vouchers to buy non-food items, which carry a goods and services tax (GST) of 12 percent or more, said Sitharaman. These purchases will have to be made digitally from GST-registered outlets 
  • an INR 12,000 crore ($1.63 billion) interest-free 50-year loan to states for spending on capital projects. An additional INR 25,000 crore ($3.4 billion) for roads, defense, water supply, urban development and domestically produced capital equipment is also part of the stimulus plan. 
The Finance Minister estimated that “the measures announced today, for boosting consumer spending and capital expenditure, will boost demand by INR 73,000 crore ($9.95 billion), to be spent by March 31, 2021.”
The NREGA Sangharsh Morcha would like to state that the government of India has chosen to, once again, ignore the plight of the most vulnerable population which has been hardest hit by the sudden lockdown -- the rural and urban workers of the country.
The pandemic and the sudden lockdown led to unprecedented hardships for the rural and urban workers of the country. Various studies and reports have highlighted massive job losses, starvation, decline in consumption, a massive increase in debt from informal sources in order to finance consumption.
A report released by the Stranded Workers’ Action Network (SWAN) in June, mentions that nearly 80% of the workers who were surveyed had taken loans during the lockdown out of whom 75% were without work. A survey of 12 states by Azim Premji University in collaboration with 10 civil society organisations in May, 2020 found that Eight out of 10 workers in urban areas have lost their jobs during the lockdown and almost 6 in 10 people in rural India saw job losses.
The measures introduced by the government earlier, particularly the increase in budget of MGNREGA, have been helpful for workers, but they have proved to be vastly insufficient. After the lockdown the GoI allocated additional Rs 40,000 crore for MGNREGA to the original allocation of Rs 60,000 crore made in the Union Budget in February 2020.
However, till the mid of this financial year around Rs 64,000 crore have already been spent. The People’s Action for Employment Guarantee (PAEG) in its tracker reports have revealed that there is still a deficit of more than Rs 481 crore. It has also found that this year highest number of households have been employed in the last three years and about 6.8 lakh households have already completed 100 days of work. Both these data sets show the importance of MGNREGA in present times and that more funds are required to run the programme.
The survey by the Azim Premji University had found that the government’s transfer of cash benefits reached nearly one-third (36%) of the vulnerable households in urban India; while a little more than half of the rural households received such benefit. Further, one-fourth of the 688 landed farmers surveyed received cash transfer through the PM-Kisan scheme.
Another survey conducted by the Jharconnect team found that, in Jharkhand, 77% of returnee migrant workers want to work in MGNREGA. However, 70% returnee migrant workers did not have a MGNREGA Job card.
At such a time, it was expected that the Government would first and foremost take steps to address the concerns of these workers. However, it has chosen, instead to please and further subsidise the only class of people who have not been affected by the pandemic at all. Infact, many people of this class have benefitted from the lockdown, as they continued to get salaries while not having to go to work for a long period immediately after the lockdown.
Given the massive scale of rural distress and return of migrant workers to their village, current MGNREGA budget is grossly insufficient
The measures taken by the government also signal are not just unjust and unethical, but also inefficient from the point of view of the objective to boost demand. The salaried class, as is commonly known, has a low marginal propensity to consume and a high marginal propensity to save. Therefore, every additional rupee spent on such people is more likely to add to savings than expenditure- since their essential needs are already being met through their salaries.
On the contrary, to boost aggregate demand, economics dictates that money be put into the hands of people who have a high marginal propensity to consume -- i.e. the manual workers, women and elderly who are struggling to consume. It is likely that every additional rupee into the hands of such workers would be spent either on consumption or direct investment into livelihood enhancing goods and services.
This can, of course, best be done through much greater investment into programmes like the MGNREGA. Through the Aatmnirbhar package, the government had increased the budget of MGNREGA from 60,000 crore to 1,00,000 crore. However, given the massive scale of rural distress and return of migrant workers to their village, even this amount is grossly insufficient.
The NREGA Sangharsh Morcha therefore has two immediate demands, first, the government should immediately double the MGNREGA budget to Rs. 2 lakh crore and second increase the number of days to 150 days per household as per the existing provisions in the master circular during a disaster although increasing it to 200 days per individual is the need of the hour.This will not only result in an immediate increase in consumer demand but will also create a massive multiplier effect by boosting rural demand and investment.
This should be coupled with a greater focus on improving governance of the programme to reduce leakages through massive social audits, instituting robust grievance redressal mechanisms at the state and central levels and ensuring transparency measures are in place (such as Citizen Information boards at all worksites, details of all works being mentioned on the walls of Panchayat Bhawans, maintenance of 7 registers etc.)

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