Government's Relief Measures to combat COVID-19

36 hours into the 21-day lockdown and the Finance Minister, Nirmala Sitharaman has already announced a string of welfare measures at a Press Conference today at 1pm. This relief package is solely aimed towards the downtrodden in the country. Mrs. Sitharaman was very clear that this package is worth 1.7 Lakh crore rupees under the Prime Minister Gareeb Kalyan Scheme which is introduced to take care of the poor during the lockdown. She highlighted that the measures would be announced in two forms- firstly cash transfers and secondly as food security.

Direct Benefit Measures:

A much-appreciated measure announced was the introduction of an insurance cover for all the doctors and front-liners who are risking their lives and treating the patients during this pandemic. The amount announced was a whopping 50 lakh rupees per person. 

Food Related Measures:

Under Prime Minister Gareeb Kalyan Scheme roughly about 80 crore people will be entitled to get 5kg of rice/wheat given to them per month for the next three months in addition to the existing scheme. Apart from that, 1kg of pulse will be given to every household, depending on regional preferences.

Target Audience:

The Finance Minister announced that there are 8 specific announcements focussed on the target group mentioned below.

Farmers, MGNREGA users, poor widows and pensioners, women with Jan Dhan Yojana bank accounts, ujwala scheme holders, self-help group women, organized sector workers, and construction workers. 

1. Farmers:

Farmers have been receiving 6000 rupees annually under the Prime Minister Kisan Yojana. They will be given the first installment as a front-loaded matter to get 2000 rupees at the beginning of the year. This will come into effect in the 1st week of April and it will benefit 8.69 crore farmers. 

2. MGNREGA users:

Minimum wages will be increased to Rs.202 per day instead of Rs.182 per day which was given earlier. This will add Rs.2000 to the family income as per month salary and is likely to benefit 5 crore families.

3. Old age/widows/disabled people

They will be entitled to rs.1000 as ex-gratia amount which will be given in two installments and will benefit 3 crore people.

4.Women Jan Dhan Account holders

Ex gratia of Rs.500 will be given per month for the next three months to 20 crore women account holders.

5. Ujwala Scheme holders:

Ideally, this scheme was introduced to provide gas cylinders to the poor. For the next three months, free LPG cylinders will be given which will benefit 8.3 crore families.

6. Self Help Groups:

7 crore households will be benefitted from this scheme. As per the Deen Dayal Yojana, earlier loans worth Rs.10 Lakh rupees were given collateral-free. However, the ministry has decided to double that amount to 20 Lakh rupees. Hence, people will have money in hand without any collateral worry. 

7. Organized Sector:

Two announcements were made under this sector with regards to Provident Fund Contribution and secondly about the withdrawals. 

The Government has taken up the responsibility to pay the EPF ie Employees Provident Fund for both the employer and the employee which is 12% each, which makes the government liable to pay 24% for three months. 

However, it is only applicable to those establishments which have up to 100 employees and 90% out of them have less than Rs.15000 as salary or wage.

The second announcement regarding withdrawals stated that EPF subscribers can now withdraw 75% of their PF balance or 3-month wages as a non-refundable advance, whichever is lower. Thus, EPF rules will be relaxed to ensure more liquidity with people. This move will benefit 4 lakh establishments and 80 Lakh, employees.

8. Construction Workers:

A welfare fund was created for building and construction site workers which currently comprises 31000 crores. It has been instructed that this fund will be utilized to protect those who are facing economic disruptions. 
The Government has also instructed the utilization of the District Mineral Fund for medical testing, screening activities and medicines to fight the pandemic.

Despite the government taking such measures, the questions that most of the pundits, journalists, and India Inc have is where exactly is the Government going to procure so much money from? Will the fiscal map have to be re-drawn, or will the Reserve Bank of India pump more cash into the system? The Finance Minister had made it clear that the Government's first and most important priority is to deal with the pandemic and mitigate the economic repercussions for the downtrodden. The fiscal structure could be given a thought in the months ahead. Another concern revolves around the implementation of this relief package amidst the lockdown. Many have also raised a question about the rural folks not having their own bank accounts despite the Government advocating about opening one ever since it came to power in 2014.

To conclude, these relief packages are definitely much needed to attenuate the magnanimity of the catastrophe that the entire world is facing. These are short-term respites that will have long-term consequences on the fiscal structure of the Government.


Disclaimer: The inputs for this article have been taken from the Press Conference chaired by the Finance Minister on 26th March 2020. It can be accessed by clicking the link below. 
https://www.youtube.com/watch?v=hIRebLyGb10