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Editorial Analysis: India must push through fiscal stimulus and Universal Basic Income

Coronavirus – an overall challenge

Approx Read Time: 5 minutes 

Coronavirus:

  • Coronavirus has caused a global public health emergency.
  • The 462,684 active cases worldwide are spread across more than 160 countries – from Fiji and Surinam with one case each to China with over 81,218 confirmed cases.
  • Over 20,834 people have died.

Coronavirus - an overall challenge
Coronavirus – an overall challenge

Impact on business:

  • The coronavirus pandemic is a public health emergency that’s also changing businesses and industries in ways not seen before.
  • Businesses all over are sending staff off on leave, and many cannot afford to keep employees on payrolls during the lockdown.
  • The pandemic will require a societal effort on an unparalleled scale.

India’s testing and case load are currently low:

  • India’s current case load of 649 (with 13 deaths) at the time of writing is relatively low.
  • However, India has also tested fewer people, primarily relying on screening lakhs of people at airports.
  • With a population of over a billion, India had tested 13,486 people in 72 state run laboratories by March 20.
  • To put this in perspective, the US by March 17 had conducted 25,000 tests, Italy 134,000 and South Korea as many as 274,000.
  • Germany in the past few weeks has been testing 150,000 people a week.

Presents a healthcare challenge:

  • India is also now at a crucial crossroads in the fight against coronavirus.
  • The PM took to television to effectively state the extent of the problem, outlined that there were no easy solutions, cautioned against any kind of lackadaisical attitude in dealing with the virus.
  • India may have no option but to move to mass testing sooner rather than later.
  • The Indian government is now moving rapidly to expand testing facilities.

Also presents an economic challenge:

  • We’re dealing with not just a health but also an economic emergency.
  • Over the next few months the economic challenge, in a time of social distancing, will also be severe as well as in the long term.
  • This is particularly so considering India has 93% of employment is in the informal sector.
  • For example, maids, drivers, tailors, barbers, restaurant waiters or delivery workers etc. may all be looking at joblessness.

Case of tourism, hospitality and aviation industries:

  • As per some estimates, the Rs 18 lakh crore tourism industry is expecting direct job losses of 1.2 million.
  • The hotel industry is expecting revenue losses of $1.3-1.5 billion.
  • The restaurant industry which employs over 7 million people is expecting likely job losses of 15-20%.
  • Aviation experts are predicting over Rs 4,000 crore in losses to private carriers and the retail business is expecting about 11 million job losses if the current crisis continues for a few months.

Covid-19 economic task force set up:

  • This is one reason why the PM asked all Indians and bosses to see things through a humane lens when taking decisions on layoffs.
  • The government has set up a special Covid-19 task force to examine options for a recovery.

What else can be done?

Universal Basic Income (UBI):

  • Apart from the sector specific bailouts, there is also need to seriously consider a Universal Basic Income and direct cash transfers in the months ahead.
  • Even the developed countries are considering monthly payouts to all the citizens.
  • For example, transferring Rs 1,000-2,000 to the bottom half of India’s poor families using the digital infrastructure set up by the JAM trinity, is technically feasible.
  • States like Telangana, Kerala etc. and others have already announced various welfare measures, from cash transfers to free food grains and subsidized meals.
  • Uttar Pradesh government has announced that it is examining options to compensate daily wage earners for losses due to the coronavirus, by studying the feasibility of transferring money directly through RTGS into their accounts.

Conclusion: (Coronavirus – an overall challenge)

  • The coronavirus has meant that business as usual will no longer be feasible in the next few months.
  • Solutions that would normally take months to debate in more placid times can be pushed through in an emergency.
  • The scale of the disruption is such that the government must try out new approaches as we negotiate the new reality.

Also Read: FM: Eases rules for bank customers, taxpayers, firms

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