In his address to the Nation, Modi
announced a Rs. 20 lakh crores or trillion rupee ($264bn) economic package to
help the country to revive economy. Majority did not expect such a bold
decision, that is, nearly 2/3rd of annual Central budget as stimulus
package.
But,
the greatest concern would be “how to tame the corruption” that such a large
stimulus package would result in. The inherited lineage of corruption is well
known. With such large funds allocation, surge in corruption is inevitable.
India is a witness to large scale misappropriation and graft in the aftermath
of floods, earthquakes and Tsunamis in the past that failed to reach the
beneficiaries. Even during wars, there have been many examples of corruption.
Abhijit
Banerjee and Ms. Gita Gopinath have already suggested stimulus funds to adopt
and implement the mechanisms of “Direct Benefit Transfers) and “Targeted
Stimulus”. With great funding comes great responsibility. Greater transparency
and civil society vigilantism is absolute necessity.
Sans
bias, Modi’s speech was inspirational for “Young aspirational” India. But, will
the nation rise to the occasion to overcome the unimaginable economic downslide
or will politics takes center stage to derail Modi’s plan? Modi and India’s
success in winning the war against Coronavirus and economic recession will
largely depend upon effectiveness of grass root level implementation.
Well
before address to the Nation, Modi had given enough indications that economic
revival plan will be “Calculative and Calibrated”. Rightly so, Modi’s focus on dual front:
reducing transmission rate of Coronavirus; and revival of economy – supply and
demand side.
Inspired
by the 'Self-reliant India campaign', Modi’s economic package is explicit: “for
our cottage industry, home industry, our small-scale industry, our MSME, laborer,
farmers, middle class, and industries.
And,
Modi has assigned the task to his Finance Minister, Ms. Nirmala Sitharaman, to
spell out the details of macro level allocations covering all sectors and
rightly so.
Furthermore,
Modi had tasked the Chief Ministers to give their feedback on relaxations for
Lockdown 4 to be announced by 17 May 2020.
Like
a good team leader, Modi is attempting to carry all Chief Ministers on board to
fight the “War against the Pandemic” both economically and medical point of
view.
However,
some Chief Ministers have already expressed dissenting voices against relaxations
particularly Maharashtra, West Bengal, Telangana, Rajasthan, Karnataka, Odisha,
Chhattisgarh and Kerala.
Most
worrisome, almost all Chief Ministers want their ‘pie’ in the cake of stimulus
package so that they can use it as per their wishes. The danger exactly lies
therein. Surely, Modi and his team have
taken adequate care to plug all loopholes. The state governments must be
allowed to take additional loans from the market or at reduced interest rates from
the RBI. Similarly, the “Big Corporate” Houses may be allowed to draw higher
working capital from the Banks.
Next,
Maharashtra was against the lifting of “lockdown’. Bihar sought an extension of
the lockdown till May 31 in the meeting — and followed it up with a decision to
the effect later at night. Telangana struck to its decision on 29 May 2020.
Almost all of
them wanted continuation of strict “Lockdown” in containment zones while
relaxing it elsewhere. In particular, Rajasthan wanted the decision to decide
and announce relaxations to be left to the Sate.
Most
important, the State Chief Ministers of Punjab and Haryana asked that states be
allowed to decide on red, orange and green zones, and containment areas. Kerala
asked for easing of norms in green and orange zones.
Karnataka
wanted the lockdown to be strictly implemented in containment zones, but did
not favor resumption of international or domestic air travel and favor
resumption of public transport in non-containment zones. Odisha, Chhattisgarh,
Kerala, Telangana, and Bihar expressed apprehensions about the resumption of
limited passenger rail services.
Surely,
Modi appreciates the problems arising out migrant labor issues with their
return in UP and Bihar. Also, the fallout on account of their exodus from other
States particularly from Maharashtra, Karnataka, Telangana, Punjab, Haryana
etc. In no way, one can expect the migrant labor to quickly go back to those
States that failed to take care of them in times of their distress.
Having
considered dissenting views or suggestions, Modi has laid down the road map for
the nation to traverse in the fight against Coronavirus spread and
incrementally resuming economic activity.
Modi
is no amateur to fall a prey to the pressures on him from all sides. By his
past, Modi has emerged as a “professional” to wars on multiple fronts. He has
taken into consideration that COVID-19 will stay for a long time to come until
a vaccine is discovered.
That
is why Modi wants the nation to counter the second front, that is, revival of
economy. And, he has already advised all
alike to effectively implement the “Social Distancing and Masks” norms
effectively whilst resuming economic activity.
Be
that as it may, let me reiterate that the Central and State government
machinery must formulate a well defined format or mechanism to monitor the
expenditures incurred, jobs revived and business turnovers, like as one expert
has suggested to draw lessons of the TARP mechanism used by the US during the
2008 crisis.
Otherwise,
sooner than later would emerge that the stimulus package funds have been
transferred to safe havens abroad by “Hawala Means” or used as “Corpus funds”
by political parties for the next round of elections.
Monitoring
mechanisms must be highly effective and stringent laws to violators of criteria
must be enacted and implemented.
Otherwise, revival of economy will remain a mirage in short term context
and the Welfare of Aam Admi would remain a forlorn hope.
The
issue of migrant labor will remain controversial and contentious issue for a
long time to come. The States most
affected due to return of migrant labor to native places include: UP, Bihar,
West Bengal, Rajasthan, Jharkhand etc.
And,
the States most adversely impacted due to migrant labor exodus include: Delhi,
Gujarat, Karnataka, Maharashtra, Tamil Nadu, Telangana etc.
When
reviewed from the “Unemployment Rates” of all the affected States, there is
enough scope to fill the gaps of exodus of migrant labor. But, the real problem lies elsewhere.
States
with high unemployment rates like UP 9%, Bihar, 7.2, West Bengal 11.4,
Jharkhand 7.7, etc., can absorb returning migrant labor by creating jobs using
their skills.
In
contrast, the unemployment rate in Gujarat is only 1.2%. Thus, the State has to
perforce depend on migrant labor to run their industry.
However,
states like Delhi 9.7%, Chandigarh 9.0%, Assam 8.0%, Punjab 7.8%, Haryana 8.6%,
Telangana 7.6%, Tamil Nadu 7.6% etc., have a complex problem to overcome.
For
example, in Telangana unemployed youth are not prepared to work as agricultural
labor or semi skilled labor in factories or construction workers. Majority of
them want a peon’s job in government service or real estate brokers as opposed
to developing as individual entrepreneurs. Unless such a mindset changes
dramatically, Telangana will have to depend on migrant labor.
Thus,
Modi’s call for “Self Reliance” and his emphasis on “every Indian has to become
vocal for their local, not only to buy local products, but also to promote them
proudly.”
Post
COVID-19 whenever it happens in posterity, India and Indians must change
dramatically in the ways they think and act with focus on “Local” to achieve
“Self-Reliance” in tune with technology breakthroughs.
At
the cost over emphasis, anti corruption agencies and organizations must enforce
anti-corruption best practices developed in the past ab initio and “catch the
thieves” before they loot and scoot.
Finally,
Modi-critics must appreciate that strategically even the present stimulus
package is only one such financial allocation with others to follow as per
situational complexities faced by the nation in posterity, if required. Surely,
Modi and his team of advisers have kept the cushion and avenues open for
appropriate interventions in posterity.
Article by Brig (Retd) G B Reddy Sir
gundreddi5@gmail.com
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