By Malay Mishra* in Puri, April 16, 2020: Managing Director of the IMF, Kristalina Georgieva in a statement on April 09 stated that the year 2020 could see the worst economic fallout since the Great Depression of the 1930s with over 170 countries likely to experience negative growth in the aftermath of the pandemic. With Goldman Sachs forecasting a revised 1.6 % per capita GDP growth for India in the current fiscal (downgraded from its earlier rating of 3.1%), these predictions mark a dire warning. Fitsch and Moody’s have also given their extremely downcast warnings.

Undoubtedly the world is passing through tumultuous changes and will not be the same again. But then what shape the new world will take, can anyone with a crystal ball forecast that? Many prognoses crowd the cyberspace. Oxfam, one of the most prominent NGOs working on studies of poverty and amongst the poor in India, in a media briefing released the same day titled, ‘Dignity and not Destitution’ called for global coordination, and particularly for the rich G-20 nations to share the burden of the poor middle and low income nations who risked impoverishment of nearly 500 million people or more (calculated on a mean of World Bank fixed income bands of $1.90, $3.20 and $5.50 a day).

The three recommendations of the report, i.e. a) Build Back Better, radically reduce global inequality; b) Health for all, introduce universal healthcare system for all and build preparedness for future such outbreaks; and c) A Human Economy, tax rich individuals and corporations to bring about some parity in income levels in the society in order to move towards a just and humane society; deserve serious attention of global policy makers and international organizations to plan the future while combating the pandemic and its evil effects.

The Oxfam report’s recommendations may not seek a wider approbation as nations are more concerned with addressing their own problems emanating from the virus now than seeking concerted action as should be. In fact, global organizations, UN, WHO, UNICEF and multilateral bodies like G-20 and OECD have not risen to the occasion except making peremptory statements or indwelling in slang matches to score brownie points. The latest example of the Trump-WHO brawl following the US President’s decision to suspend USG’s contribution to the global health organization is a case in point.

However one concept which is rapidly gaining ground in some form or the other is to move forward on a Universal Basic Income (UBI). The concept had been first mooted in the US by Andrew Yang, a Democratic Presidential contender who soon after dropped out of the race in Feb 2019. Yet the concept is gaining greater traction ironically in a few developed countries who still have a stronger social safety net than those countries who have neither been properly equipped in handling the pandemic nor aiding the poorest segments of the society enough in fighting want and hunger. Spain became the first country to have introduced UBI through legislation, to put $475 into every citizen’s hand, despite being a relatively deficient economy of Europe and having suffered one of the highest casualty rates in the world.

It is time India also thought of a moderated scheme of UBI to reach the poorer segments of the society, e.g. universalize distribution of food grains among all poor, even those who do not strictly fall within the purview of the PDS (a recent study has calculated nearly 110 million poor being missed out as the government has gone by the 2011 census in calculating the population figure and this has not been updated).

This is very much possible given the surfeit of food grains in India’s food stocks (77 million tonnes of food stocks against the current annual requirement of 22 million), at least to tide over the crisis. As Nobel laureate economist Amartya Sen in his famous study of the 1943 Bengal famine had pointed out, people die not due to shortage of food but because of lack of access to it. Therefore it is not production but distribution and supply which needs to be firmed up in this crisis of hunger and poverty.

The government of India announced a second stimulus package of Rs 15,000 crore specifically meant to address the situation though a bigger chunk of that will go to the states. Both the previous and the present packages totalled would be even less than 1% of India’s GDP, among the lowest in the world.

While some economists feel that it would be prudent on the govt’s part to increase the quantum of assistance even at the cost of causing fiscal imbalance to the tune of 5% of GDP, some others feel that the economy’s fiscal behaviour with the background of an economic stagflation would need to be carefully safeguarded. It is now a question of protecting lives or the economy in broad terms, and all the central and state govt policies flow out of that, though rational behaviour demands that a balance of both be followed.

Former Finance Minister P Chidambaram recently stated that the govt needed to put at least Rs 5000 in every poorest family’s hands either through bank transfer or direct payment. He calculated that for half of at least 25 crore poor families though there could be many more. This amount would help them tide over their immediate requirement for the next three months that they are deprived of their livelihood while at the same time making the distribution flow easy so that availability of goods and services are assured.

In any case with demand at an all-time low and shortages and unemployment in all economic sectors being endemic, the govt should not be worried about inflation. In fact the option of printing more money by the RBI, with a comfortable foreign exchange reserve of nearly $380 billion, could also be explored. In other words, all possible options are there for the govt to choose the right course with a suitable mix.

The PM after several rounds of consultations with the CMs, including the latest on April 11, agreed to the extension of the lock down period until May 03 which he announced on April 14, the last day of the previous lock down period along with a seven-fold ethical advice to keep safe at home, take care of elders, protect the poor and needy, respect front line corona warriors, and importantly to access the government sponsored app, ‘Aarogya Setu’, an invasive app which could draw the basic data of the user while connecting her to the government and broadening awareness of COVID 19!

On April 15, the govt issued a number of guidelines to be followed in two phases, first from April 20 in the non-hotspot zones and thereafter from May 03 in the whole country, basically to revive industries in urban as well as rural areas, agriculture and allied activities, and distribution of essential and non-essential goods.

No sooner had the PM’s announcement been made, chaos broke out with thousands of migrant workers screaming to go back home at Bandra station in Mumbai until the police had to resort to lathi charge to quell the mobs and several FIRs were filed including one against a television channel journalist. It transpires that the Railways had already started issuing tickets and several trains under the SER had been lined up to take migrant workers home, consequently 39 lakh tickets had to be cancelled!

To compound the situation, a dismal shortage of PPEs, ventilators, ICU beds, isolation wards and testing kits has shown the government’s lack of preparedness despite the crisis having been noted in Wuhan in Dec last year, though the PM mentioned that the govt had made timely interventions air travel by January even when not one single case had been detected in the country!

By the time, through the months of February and March, several events took place which further denoted the government’s insufficient preparedness in realizing the dimensions of the crisis, and during this time the government was nearly in self denial without sufficiently gearing up the public health infrastructure of the country.

fact, even after two days of the WHO declaring the COVID-19 as a pandemic on March 13, the Health Ministry was still denying that the situation in India did not warrant a public health emergency! Meanwhile the US President’s visit, the Parliament being in session, the fall of the MP state government, all showed how lightly the government had taken its own guidelines of social distancing and home isolation!

If India goes the South Korean way, India needs to have vast quantity of equipments to carry out the tests as massively as it can, at least in the containment zones (otherwise known as the ‘hot spots’), a policy which will be difficult to implement for shortage of materials. Clearly a Catch-22 situation. It is noteworthy how India has been breaking its own export ban regulations to supply drugs like hydroxychloroquine to USA, Brazil, Sri Lanka and Israel who are in the first batch of 13 countries (among whom all SAARC countries, minus Pakistan besides Mauritius and Seychelles) on the ground that India has sufficient stocks of this drug for its own population.

The situation presents Modi an opportunity to play the global leader and coming to the rescue of countries in need of such medicines. Seems India had also sent PPEs and testing kits to a few neighbouring countries while it is facing a severe shortage of these very items now, and has had to import them from China.

* Malay Mishra is a former diplomat

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4 Comments on "India Must Unveil Universal Basic Income Plan for Distressed"

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Surendra Kumar Mohanty
Surendra Kumar Mohanty

Very informative and touched major aspects of the issue. But the real problem ahead is to see how the plans are going to be implemented.

Jyotish Mishra Saved

Well analysed . Wish the authorities to take actions. “ Better late than Never “. Our response historically has been reactive . We can’t foresee .

Chandi Prasad Mohanty
Chandi Prasad Mohanty

There has been lots of talk and also some work done on reducing the huge disparity in income between the rich and poor. As has been pointed out in the article, from time to time the Government has announced various packages for the economically deprived sections of the society. However, the assistance does not go up to the last man standing in the line. Most often the policy and the intention gets diluted because of slackness in distribution. More emphasis and attention need to be given to the execution of the policies on the ground.

Puspitarani Bardhan

Nice one sir.