Coronavirus: $23 billion to help the poor as India braces for widespread economic pain
By Atul Ranjan
NEW DELHI, NNA - Barely three days after a three-week nationwide lockdown was imposed, India on Thursday announced a $23 billion financial package to help the poor tide over the economic disruption caused by the coronavirus pandemic.
To ensure food security, about 800 million people or two-thirds of the 1.3 billion population will receive free food and cooking gas, for at least three months.
“Today’s measures are intended at reaching out to the poorest of the poor, with food and money in hand, so that they do not face difficulties in buying essential supplies and meeting essential needs,” said the country’s Finance and Corporate Affairs Minister Niramla Sitharaman when announcing the stimulus package in New Delhi.
The government will give 5 kilograms of rice or wheat to each person and 1kg of pulses to each household for the next three months.
Poor households transitioning from traditional fuels to cooking gas for cooking under a scheme will be given free gas cylinders. This will benefit 83 million people over the next three months.
“The government would not allow anybody, specially any poor family to suffer on account of non-availability of food grains due to disruption in the next three months,” the minister gave her assurance to the nation, the second most populous after China.
To protect 2.2 million health workers at the front line, the government is also offering insurance cover of 5 million rupees ($67,000) each as the country combats the Covid-19 disease outbreak which is spreading fast across many states, infecting 808 people and killing 17 as of Friday morning.
According to the finance ministry, all health and wellness centers and hospitals under the central as well as state governments would be covered under the scheme.
Poor farmers will be given 2,000 rupees in the first week of April under an existing scheme of cash transfers. Also, under the government’s employment guarantee scheme for low-salaried workers, their daily wage has been increased by 20 rupees to 202 rupees.
In addition, 200 million women under a financial inclusion scheme will receive an ex gratia payment of 500 rupees monthly for the next three months.
During the same period, the government will also make provident fund contributions of 12 percent each on behalf of employees and employers for organizations with up to 100 employees earning less than 15,000 rupees a month.
Brokerage firm Nomura Securities Co. noted in its March 26 report that as most of the relief measures are meant to help people weather difficulties in the next three months, the move suggests that the government expects the economy to be hit for about a quarter of the year.
“The government’s fiscal package is primarily aimed at countering the adverse effects of recently announced nationwide lockdown measures on the poorer and affected segments of society by ensuring cash transfers and food security,” it said.
According to Nomura, the 21-day nationwide shutdown will shave 4.5 percent off India’s gross domestic product.
However, Nomura noted that the relief package amounted to only 0.8 percent of its GDP, which is "relatively small and reflects the government’s fiscal constraints.”
Sangita Reddy, the president of the Federation of Indian Chambers of Commerce and Industry (FICCI), said the crisis facing the nation relates not just to health, but it is a larger economic and humanitarian crisis that “requires the kind of response" from the government.
“The disruptions caused by Covid-19 and its spread are massive. We see dislocations across sectors. There is a large-scale movement of people taking place as economic activity comes to a halt,” she said.