Creative accounting, window dressing apart Centre's COVID-19 relief package 0.5% of GDP: Jean Drèze

The Centre announced a relief package recently and a few other interim measures after the 21-day nationwide lockdown to combat COVID-19 left millions across India in the lurch without work, food or a place to go. Is the government up to the task? What awaits the bottom of the pyramid? DTE spoke to economist Jean Dreze. Edited excerpts:

By Jitendra
Published: Friday 10 April 2020

Economist-activist Jean Drèze works as a visiting professor at the Ranchi UniversityMillions of migrant workers fled cities as the government announced lockdown. What happens to them now? 

Many of them belong to households covered under the public distribution system (PDS), social security pensions and related schemes. But they will find it difficult to survive on the meagre benefits offered by these welfare schemes.

The benefits will have to be scaled up and supplemented with interventions like emergency cash transfers and community kitchens. This is important as migrant workers will hesitate to leave their homes again for some time.

Besides, little work will be available for them at home, unless they have land for farming. If the Mahatma Gandhi National Rural Employment Guarantee Act can be reactivated soon, with higher wages and a reliable payment system, that will help. 

What’s your opinion on the Centre’s relief package? 

If you discount the creative accounting and window dressing, the size of the package is closer to Rs 1 lakh crore than Rs 1.7 lakh crore. That’s 0.5 per cent of (India's) gross domestic product (GDP), or less than what the Centre blew on corporate tax cuts last year at the first sign of an economic slowdown.

Implementing relief measures will take time, but meanwhile hunger is spreading. States need immediate support for emergency relief measures like community kitchens and shelters for migrant workers. That’s a gaping hole in the Centre’s package. 

Of late, migrant workers have been the main drivers of the rural economy. Will this change? 

The compulsion to resume seasonal migration sooner or later will be very strong, because millions of poor people can barely manage without it. But for the duration of the health crisis, migration is likely to be much subdued, and the crisis is not going to end so soon. 

How will the pandemic affect our food supply and economy? 

There is the possibility of disruptions of the food system related to lockdowns and economic recession. Right now, we are in an odd situation where shortages and surpluses coexist as the supply chain is largely broken.

Food inflation is subdued as most are unable to shop beyond bare necessities. But that may change once the lockdown is relaxed. Then those who can afford it are likely to go on a shopping spree.

If the supply chain is still in bad shape, there may be localised price spikes, pushing more people to the wall, especially those who are out of work. Events of this sort are likely to continue if periodic lockdowns continue in the next few months.

Even after the lockdowns end, the food supply system is likely to suffer for some time from the general disarray of economy. 

What lesson should India learn from the crisis? 

We need to give higher priority to health and social security. Even the most ardent devotee of capitalism would recognise that market competition is a poor way of organising health services, especially public health.

Most affluent countries, with the sobering exception of the United States, have come to terms with this and made health for all a public endeavour. The same applies to social security. The other lesson is recognising the value of solidarity and how it is constantly undermined by the caste system and other social divisions. 

Subscribe to Weekly Newsletter :

Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.