To address the immediate economic distress in the wake of the lockdown prompted by the Covid-19 pandemic, and ensure food and cash reaches the marginalised segments of society, the government announced a Rs 1,70,000 crore package, under a new scheme, the Pradhan Mantri Gareeb Kalyan Yojana (PMGKBY), on Thursday.
Finance minister Nirmala Sitharaman, at a press conference in the capital, announced a series of measures, which focused on additional food transfers at no cost, additional cash for vulnerable segments, concessions on government schemes aimed to help households reduce their expenditure, and support those in the frontline of the battle against the pandemic. The primary beneficiaries of these measures include those below the poverty line, farmers, women, elderly citizens, the physically challenged, and workers in both the unorganised and organised sectors.
Sitharaman underlined that within 36 hours of the lockdown — Prime Minister Narendra Modi directed a national lockdown for three weeks on Tuesday night — the government had come up with measures to immediately take care of welfare concerns of the poor. She, however, did not address questions about the fiscal implications of the scheme, or announce measures for other economic sectors which have also got severely affected in the wake of the restrictions and the lockdown.
Sitharaman announced a medial insurance cover of Rs 50 lakh per person for doctors, health care personnel and sanitation staff, acknowledging their contribution at this crisis hour.
The PMGKY had two broad components — the first was centred on ensuring food availability and support, and the second was centred on income support.
On food, Sitharaman said 800 million people — two-thirds of the country’s population — would now be eligible for, in addition to the existing allocation of five kg of wheat or rice, another five kg of wheat or rice per month, for the next three months, for free. They would also get one kg of pulse, according to the specific regional variant of the pulse in their geographical area, in this period. “This is meant to ensure that no one stays hungry,” emphasised Sitharaman.
In terms of direct financial support, the FM announced support under eight distinct categories using the direct benefits transfer framework.
The first was targeted at farmers, who get direct cash support of ₹6,000 annually under the PM-Kisan scheme. Sitharaman said that the first instalment of the money — ₹2000 — would be “front-loaded” and given immediately. “This will benefit 86.9 million farmers,” said the FM.
The second was for workers under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS). From a daily wage of ₹182, they would now be entitled to get ₹202. “This will benefit 50 million families. It will help increase the income to ₹2,000 per worker,” emphasised Sitharaman.
The third measure was for economically poor widows, elderly citizens above the age of 60, and the physically challenged. “They will get an ex-gratia amount of ₹1,000. The measure will benefit 30 million poor citizens,” the FM said. The amount is to be given in two instalments.
The fourth measure was targeted at women who held Jan Dhan Accounts. “There are 200 million women Jan Dhan account holders. The government will give them ₹500 per month, for three months, to ensure they can run their households in this period of disruption.” A related announcement was for the beneficiaries of the PM Ujjwala scheme, where over 83 million households got gas cylinders. “For three months, these households will get free cylinders.” Anecdotal evidence suggests that many households have found the cost of refilling their gas cylinders burdensome. Minister of state for finance, Anurag Thakur, sitting alongside Sitharaman, underlined that with these measures, the government was seeking to ensure that poor families had access to food, to incomes, and to cooking gas.
The fifth measure was targeted at women self-help groups (SHGs). Sitharaman pointed out that there were 6.3 million SHGs in the country, with members from 70 million households being members of these groups. “They were eligible for collateral-free loan up to ₹10 lakh till now. This amount will now go up to ₹20 lakh. Self-help groups are eligible for increased collateral free loans, which will give more money in their hands,” said the finance minister.
The sixth measure was targeted at organised workers. This had two components. The government, the FM announced, would contribute both the share of the employee and the employer of the Employer Provident Fund for the next three months. “The government will give both the 12% share of the employees, and the 12% share of the employers — so a total of 24% per month for three months, to ensure there is no break in the continuity of EPFO contributions. This will apply to establishments which have less than 100 employees, where 90% of the employees earn less than ₹15,000 per month.” The second inter-related measure was the government’s decision to amend the provident fund regulation scheme, to allow employees to withdraw, on a non refundable advance basis, 75% of the amount, or up to three months of wages, whichever is lower, from their accounts.
The seventh announcement was for construction workers. The FM said that there already existed a fund for the welfare of construction and other workers. This had, at the moment, ₹31,000 crore and 35 million workers were registered under it. “We have given directions to state governments to utilise the funds to provide assistance to construction workers to protect them.” And the final announcement was with regard to district mineral funds, with the FM requesting state governments to utilise these funds to supplement medical testing and screening activities to fight the coronavirus.
Congress parliamentarian Rahul Gandhi said the government’s announcement “of a financial assistance package” is the first step in the right direction. “…India owes a debt to its farmers, daily wage earners, labourers, women & the elderly who are bearing the brunt of the ongoing lockdown,” he tweeted.
Trinamool Congress MP Derek O’Brien said the measures were similar to what states have already announced. “Centre takes cue from relief plans already rolled out by state governments like West Bengal a week ago— free six months ration for the poor, health insurance for champion frontliner’s fighting corona and Rs 1000 for daily wagers under new Prochesta scheme,” he said, adding that the Centre’s move will supplement state efforts.