Coronavirus: Centre plans more cash doles for poor

With COVID-19 woes continuing unabated for the poor and the marginalised, the government may come up with more stimulus, especially direct cash transfers that will mitigate their hardship and boost consumption demand, much needed to lift the economy at this stage.

The one-time cash benefits to the Jan Dhan accounts of women and poor senior citizens — announced by the government under the COVID package for three months till June — may get extended by up to three more months. The government is also mulling increasing the amount, according to officials privy to the matter.

Cash transfers under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) may also see an increase, as the return of migrant labourers to their hometowns has further increased demand for work under the scheme, they said.

Finance Minister Nirmala Sitharaman had in late March announced a Rs 1.7 lakh crore stimulus package comprising free foodgrains and cooking gas to the poor and cash doles of Rs 500 a month to women and elderly for three months under the Pradhan Mantri Garib Kalyan Package. Subsequently, the government had also assigned Rs 40,000 crore under MGNREGS, which was over and above the Rs 61,500 crore allocated in the Union Budget 2020-21.

Sitharaman, who recently announced the suspension of all new schemes up to Rs 500 crore, had said only the schemes under Atmanirbhar Bharat Abhiyan and Pradhan Mantri Garib Kalyan Packages will be initiated and continued.

Economists and credit rating agencies have raised the pitch for more demand-side measures to lift the economy and avoid a second-round impact of COVID. The fiscal impact of the Rs 20 lakh crore package, according to many, was only Rs 2.14 lakh crore or a little over 1% of the GDP, not enough for a country of 130 crore people.

A comparison of COVID support packages of 20 major economies shows the actual fiscal stimulus is the lowest for India at 1.3% of the GDP and the highest for Singapore at 10.4% of the GDP.

Recovery now uncertain: CEA

The surge in virus cases has led to an uncertainty in India’s economic recovery, which may get delayed by six more months, Chief Economic Adviser K V Subramanian said. “What is uncertain is whether the recovery will happen in the second half of the year or the next year. The actual growth will depend on when it happens,” he told reporters.