COVID-19: Rs 8 lakh crore package needed to support lower income groups, says report

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New Delhi: The government will need to roll out a relief package worth Rs 8 lakh crore to contain hardships being faced by lower-income groups due to the economic impact of COVID-19, a report by Azim Premji University said on Wednesday.

The report is based on inputs from Consumer Pyramids Household Survey, Azim Premji Foundation, and many other civil society organisations.

As per the calculations based on CMIE-CPHS data, the report said, around 23 crore people are estimated to have fallen below the national minimum wage poverty line due to the impact of COVID-19 on the economy and around 1.5 crore workers remain jobless by the end of 2020, the report titled State of the Work 2021 said.

The study found that nearly half of formal salaried workers moved into informal work, either as self-employed (30 per cent), casual wage (10 per cent) or informal salaried (9 per cent) workers, between late 2019 and late 2020 and there was a decline in their income level as well.

In April and May, the poorest 20 per cent of households lost their entire income and the richer households suffered losses of less than a quarter of their pre-pandemic incomes, the report said.

To bring relief for the people suffering hardships of COVID-19 impact, the Azim Premji University report on Wednesday recommended measures that would cost the government an additional expenditure of around Rs 8 lakh crore.

“The measures that we have proposed will bring the spending by the government of India to 4.5 per cent of overall GDP between this year and last or about Rs 8 lakh crore. We think that is not even internationally comparable to what other countries have done, but really what India needs to do,” Azim Premji University associate professor of economics Amit Basole said while releasing the report.

According to the report, around 30 per cent of people in some states did not get ration as per Pradhan Mantri Gareeb Kalyan Yojana, which needs to be investigated.

“Something like 30 per cent of PDS priority ration cardholder, unfortunately, did not receive the extra grains, at least in these two states (Karnataka and Rajasthan) and this number of 30 per cent we find broadly similar also in few other states that we have done as part of our other COVID livelihood survey,” Basole said.

According to the report, the public distribution system has a wider reach than Jan Dhan Yojana, and free rations under the PDS should be extended beyond June, at least till the end of 2021.

In Karnataka and Rajasthan, out of those having women-owned Jan Dhan accounts, 60 per cent received one or more transfers, around 30 per cent did not receive any transfers and 10 per cent did not know about the fund status in their account, it added.

The university report has recommended a cash transfer of Rs 5,000 for three months to as many vulnerable households as can be reached with the existing digital infrastructure, including but not limited to Jan Dhan accounts.

It has suggested expansion of MGNREGA entitlement to 150 days and revising programme wages upwards to state minimum wages.

This needs to expand the programme budget to at least Rs 1.75 lakh crore, according to the report.

It has also recommended launching a pilot urban employment programme in the worst-hit districts with a focus on women workers, increasing the central contribution in old-age pensions to at least Rs 500, a COVID hardship allowance to 25 lakh Anganwadi and ASHA workers of Rs 30,000 and automatically enrolling all MGNREGA workers who do construction work as registered workers under the building and other construction workers (BoCW) Act.

“The survey has been supported crucially by various organisations including Azim Premji Foundation and Azim Premji Philanthropic initiatives, Initiative for What Works to Advance Women and Girls in the Economy as well as many civil society organisations have contributed in bringing the information that we have been able to collect,” Basole said.