A couple of days after the three-week nationwide lockdown came into force, Union Finance Minister Nirmala Sitharaman announced a Rs 1.7-trillion food-security and income-transfer package for the urban and rural poor.
The package includes free foodgrain for 800 million people for three months, insurance cover for essential-service providers, front loading PM Kisan instalments, and increase in wages under the employment guarantee programme.
Sitharaman also promised a one-time payment to women Jan Dhan accountholders and widows belonging to economically backward sections, pensioners, and differently abled; extra free cylinders for Ujjwala beneficiaries; a hike in collateral-free loans for self-help groups; operationalising a construction workers’ fund; and contributing to organised sector workers’ employees’ provident fund (EPF) accounts.
Sitharaman did not rule out further announcements targeting other sectors, and a senior government official said a comprehensive package for micro, small and medium enterprises was being worked on, declining to give further detail.
Prominent names in the government and the opposition reacted to Sitharaman’s announcements.
“Comprehensive measures announced today (Thursday) will mitigate the economic impact of the COVID-19 outbreak on the rural and urban poor, farmers, health workers, migrant workers, divyangs, senior citizens and other vulnerable sections of society,” Petroleum Minister Dharmendra Pradhan said.
Former finance minister P Chidambaram said while he was “glad” at the announcements, he called them “a modest plan”.
“In due course, the government will realise that it must do more. The plan gives adequate additional food grain to the poor for three months, and that is welcome. It does not put enough cash in the pockets of the poor. Some sections have been left out altogether,” he said.
“You will notice that suggestions like help to tenant farmers and the destitute, maintaining current levels of employment and wages, tax deferment, deferring payments of equated monthly instalments, cuts in rates of goods and services tax, etc. have not been addressed. Let’s hope there will be a Plan II shortly,” Chidambaram added. During the finance minister’s media briefing and in the official press release, the Centre declined to share the expenditure constituents of the Rs 1.7-trillion package. With some of the announcements not exactly being fresh monetary outlays, it is not clear what the extra expenditure would be.
In the absence of an official break-up, back-of-the-envelope calculations show the size of the additional outlay comes to be a little less than Rs 1.03 trillion, about 3.4 per cent of the size of 2020-21 Union Budget.
Sources said this comprised Rs 45,000 crore of additional expenditure on subsidised food, Rs 5,600 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme, Rs 34,000 crore for senior citizens, poor widows, and divyang, Rs 13,000 crore for free cylinders, and Rs 5,000 crore for contribution to the Employees’ Provident Fund.
Some of the expenditures would be incurred from the existing schemes or funds only. For example, Sitharaman said the first instalment of PM Kisan would be frontloaded and each farmer would be given Rs 2,000 in April.
Officials said this would cover around 87 million farmers and the outlay would be around Rs 16,000 crore. However, since this is front-loading and not an additional amount, the figure cannot be considered extra spending and is part of the 2020-21 PM Kisan allocation of Rs 75,000 crore.
Officials said since 2019-20 was almost over, this extra expenditure would be accounted for in the 2020-21 financial year. Sitharaman also said that the states would be asked to utilise the Rs 31,000-crore construction workers welfare cess fund. However, the corpus of this fund comes from employers and is maintained by states, with no contribution by the Centre.