Expand ₹500/month Cash Transfer to Poor Non-farmer and Urban Households

By Dr. Arjun Kumar and Ritika Gupta | IMPRI, New Delhi

By Dr. Arjun Kumar and Ritika Gupta

Delivering a Special Lecture organized by the Center for Work and Welfare (CWW) at Impact and Policy Research Institute (IMPRI) on Labour, Employment and Pandemic: Policy Suggestions and Way Forward for Budget 2021, Dr. Santosh Mehrotra, Retired Professor of Economics, Centre for Informal Sector and Labour Studies at the School of Social Sciences, Jawaharlal Nehru University, observed that the fiscal stimulus provided by the government post lockdown was severely inadequate. It was only a fraction of what was provided post the 2008 Global financial meltdown where the effects on the economy were comparatively mediocre, he maintains.

Prof Mehrotra stated that while going into the ill-planned lockdown, India already had about 280 million unemployed people. He added that the growth rate of the country was falling quarter by quarter since 2016 and had hit a dismal low of 4.1% in early 2020. The lockdown imposed in March, which is touted as the most stringent in the world by various reports, skyrocketed India’s unemployment rates and contracted the growth rate lower than any other G-20 country, he added.

To revive India’s growth story and to cash in on our rapidly closing demographic dividend window, Prof Mehrotra postulated four essential features that must be included in the Budget 2021. This includes an increased expenditure in infrastructure and the health sector and an urban employment guarantee. The fourth most significant measure according to him is a minimum income guarantee of Rs 500 per month to the poor households. He adds that this could be done as a substitute to the PM-KISAN scheme where the benefits would be extended not just to the owner cultivators but also the tenant farmers, landless laborers, and the rural and urban poor. The beneficiaries should be identified using the Socio-Economic Caste Census (SECC) data. This will cost the exchequer only about 10000 crores more than the expenditure on PM KISAN, estimates Mehrotra.

Prof Dev Nathan dwelled upon the issues in the political economy. He highlighted how there is a historical disparity whereby the focus has been on the hyperscale sector and the rural sector has been given very little. Panelist Prof. Sarthi Acharya, Managing Editor of Indian Journal of Labour Economics (IJLE), highlighted the structural inefficiencies that existed in the economy since the 1990s which has exasperated the effects of the pandemic. He batted for long term industrial and agricultural policies and focus on Small and Medium Enterprises and value-added exports. He also mooted the need for restarting the 5-year planning model which was also corroborated by Prof Mehrotra. Panelist Dr. Amrita Pillai, Research Fellow at NIPFP, suggested measures that need to be included in the Budget 2021 to give a push to the MSME sector. This included a direct support scheme, extending the Emergency Credit Line Guarantee Scheme (ECGLS), and reviewing the compliance requirements for MSMEs to promote ease of doing business.

The special lecture was organized by the Impact and Policy Research Institute (IMPRI), New Delhi, on the 9th of January 2021. The session was chaired by Prof Dev Nathan and moderated by Prof Utpal Kumar De, Profesor at North-Eastern Hill University, Shillong. The other participants included Prof. Abdul Wadud, Professor of Rajshahi University, Bangladesh, and Prof. Elias Hossain from Bangladesh.  

Acknowledgments: Nikhil Jacob, based in Goa, is a research intern at Impact and Policy Research Institute (IMPRI), New Delhi, and is pursuing a post-graduate diploma in Environmental Law and Policy from the National Law University, Delhi.

Event Page: https://www.impriindia.com/event/labour-employment-budget-2021/ 

Facebook Video: https://www.facebook.com/watch/?v=1124269704693109 

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