Why Such A Niggardly Covid Relief Package?

Faced with the prospect of economic collapse and even starvation, a fiscal package of 10 per cent of GDP is in order

- KP Kannan

These are not normal times for any country. In one swoop, Covid-19 has proved how fast it can globalise and integrate all countries and people, albeit in a disastrous way. While the Western countries are paying a high price for their initial lackadaisical attitude, one shudders to think what price India will have to pay, should the situation assume the proportions of those in some other countries.

With two-thirds of its 1.34 billion people having to make do with a hand-to-mouth existence, the COVID-19-induced health crisis could easily transform itself into a hunger crisis for this huge mass of people. With 90 per cent of its workforce without employment or social security, a lockdown means no work and hence no wages, and thus no means to support the family, unless the state steps in decisively and in full measure. A rough calculation of ‘no work no wages’ for the 90 per cent of the workforce translates itself into a wage/earnings loss of at least ₹3.5 lakh crore per month for these insecure, or informal, workers. We are already witnessing this with the current lockdown, that is set to go beyond one month.

A lockdown in economic terms means a simultaneous demand and supply compression that has already halted this large economy, consisting of many small units of production and services. Strangely enough, the expenditure for keeping the health system in an overdrive mode and the attendant support system and minimal exchange of food and medicine are the segments that are contributing to the maintenance of a part, albeit small, of the national income.