To Be Or Not To Be..?

?I will give you a talisman. Whenever you are in doubt, or when the self becomes too much with you, apply the following test: 

Recall the face of the poorest and the weakest man whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him. Will he gain anything by it? Will it restore him to a control over his own life and destiny? In other words, will it lead to swaraj for the hungry and spiritually starving millions? 

Then you will find your doubts and your self melting away 

-M.K.Gandhi 

Out of the 17 Sustainable Development Goals (SDGs) articulated by the United Nations, the number one goal is elimination of extreme poverty by 2030. The COVID-19 pandemic poses a real challenge to the UN SDG of ending extreme poverty by 2030. This threat from covid-19 will increase global poverty for the first time since 1990. Projections based on the recent analysis by researchers at the United Nations University World Institute for Development Economics Research (UN-WIDER), shows that in a worst case scenario, 104 million more people in India could fall below World-Bank-determined poverty line of $3.2 a day for lower-middle-income countries.

At present nearly, 60 percent of India?s population, or an estimated 812 million people, live below poverty line. Given the realities of the pandemic, people belonging to this stratum of the society are the most vulnerable to the long-term effects of such an unprecedented event. It is this stratum of the society which is grossly involved in the informal economy which accounts for nearly half the GDP and it dominates the employment front such that nearly 90 percent of the workforce is explicitly engaged in the informal sector in India.

This amounts to nearly 500 million people in the informal sector. They neither have a guaranteed income nor any social security measures. The International labour organization (ILO) report estimated that nearly 400 million people in Indian Informal sector could slide deeper into poverty. These are the people who are mostly migrant workers living under inhospitable conditions in dire poverty. Since the n-Covid-19 pandemic took its shape, the most vulnerable segment of the society is asking one simple question-To be or not to be..???

Two of the authors Florence Bonnet and Vicky Leung, of the report ?Women and Men in the Informal Economy ? A Statistical Picture (Third edition)? pointed out in the report that not all informal workers were poor; poverty was both a cause and a consequence of informality. Let us understand in the next segment the situation of the vulnerable in India especially the ones engaged in the informal economy.

Why Us?

India?s overcrowded streets are quiet. With no work and a nationwide lockdown the ever bustling informal sector has come to a standstill. The Indian commerce is ice-cold, the banks are in turmoil, the transportation, hospitality and tourism sector, Agriculture and construction industry is facing the brunt too. Given the current situation and the reality that majority of the population works in Informal sector, these most vulnerable segments of the society are bound to face the negative external effect of the covid-19 pandemic.

One can anticipate that in a worst case scenario they will suffer not only monetarily but also emotionally, physiologically and on very many other non-monetary indicators, making them more vulnerable to a poverty trap. Under such circumstances they are asking the state and the society, why we? Why this segment has to face the brunt of every economic and health phenomenon happening in the country and/ or around the world. Has the state failed in delivering to the most vulnerable??

According to Nobel Laureate Abhijit Banerjee the Indian government has not failed but has not done enough for the poor. He opined that the state has to be more aggressive about spending money to support the poor during the covid-19 pandemic. The people in the country need reassurance and the government has to be proactive in reassuring people, he told BBC. It is indeed the duty of the state to make sure that its people remain intact, the underlying cost to achieve the same can be recovered in the longer term. It is not too late for different stakeholder to show that they care for their people.

The Stakeholders

A Welfare State

The constitution of India has envisaged an egalitarian society in which people belonging to different stratum of the society will co-habit and the state will achieve the goal of a welfare state. In case of any form of disequilibrium the state will ensure it plays a pivotal role in fighting disequilibrium in all its dimensions. Experience of Seven decades of planning revealed that the various underprivileged friendly policies adopted by successive governments have gradually benefited the masses but unfortunately this equitable distribution of resources, wealth, and attention has still fallen short of achieving the distant dream for nearly 60 percent of the Indian populace who continue to stay in inhospitable conditions in urban, peri-urban and rural areas.? In fact they are the ones, exposed to the brunt of corona virus pandemic more than any other section of the Indian society. With little or no savings and no daily wage employment, they do not have any other support except the civil society and the state.

The State Support

The Government of India has pronounced immediate stimulus package to bail out industry and also to support the populace with provision of food and some cash transfers to their Jan Dhan Accounts. The government is not using the traditional pattern followed by rest of the world to use helicopter drop, rather they will roll out relief measures in a calibrated manner to support firms hit by the nationwide lockdown. These doses of much needed relief will provide the businesses some breathing space in the troubled times. On the similar grounds the Ministry of Finance has also rolled out about Rs. 1.7 Trillion- just 0.8 percent of GDP to provide relief package towards food security and cash transfers for the vulnerable. Furthermore the centre will have to take aggressive stance to bridge the income gap created due to this pandemic. This is an emergency and the state will have to give much needed support to the businesses and the vulnerable and contain the virus before it wipes out humanity.

The Monetary Measures

The Reserve Bank of India announced rates cuts to induce Rs. 3.74 Trillion liquidity into to system and also requested the banks and financial institutions to allow moratorium on payment of instalments to fight the disruptions caused by covid-19. In the previous week the RBI again reduced the reverse repo rate so as to provide much needed support to the Non-banking Financial Companies (NBFC?s), Micro Finance Institutions (MFI?s) and increase the available funds to the state governments. The RBI said that this rate cut will act as disincentives to the banks that previously used to park their excess liquidity with the RBI. The same funds will remain in the market and help boost the much needed liquidity.

The Civil Society

Kerala government with its well established local self governments identified the financially weaker and delivered essentials as well as cooked food items at the doorsteps of those isolated due to covid-19. These objectives were only possible because of the setting up community kitchens in nearly 900 (+) panchayats in the state. These community kitchens also aims to provide free of cost meals to the isolated weaker sections. The Kudumashree poverty eradication mission of the state is given the charge of setting up community kitchens and volunteers from across the spectrum are offering manpower and cooking utensils, making it easy for the state to fight against the invisible enemy. The usage of social media for placing orders from the panchayat level is an incredible step which promotes quick and safe processing. These volunteers aim to deliver food at the door steps free of cost for financially weaker families, whereas for the rest of the populace they will charge Rs 20 plus the Rs 5 delivery charge for a vegetarian meal. On the similar grounds several other state governments should start with Junta Kitchens, subsidised thalis etcetera. A few worth mentioning are the Shiv Bhojan Scheme of the Maharashtra state, or the Amma Canteens of the Tamil Nadu state as well as the Delhi government initiatives which aim to cater the needs of financially weaker.

Revival: Imagine 

Revive Mood for Demand

With the nationwide lockdown and budget constraints induced on the populace as a result of lost income source, the general population is scared and are cautious about spending any residual savings in the near term. This will create a dual problems for the economy-namely on the demand side as well as supply side. The supply side crunches can be eliminated with the opening up of economy in a phased manner, but the demand side sentiments will have to be taken care by the state with the provision of much needed emotional and monetary support. Hence it will be the duty of the state to inject enough liquidity in the economy so as to induce a mood for demand as well as control the undue inflation once the nationwide lockdown is lifted.?

Imagine the Revival

The covid-19 crisis is seen as an opportunity in disguise for Indian firms. With export potential and the ability to substitute Chinese goods in the overseas market, Indian firms can take advantage of the current crisis. Once these exports increase, the informal sector will breathe again with ease, giving the much needed work and opportunities for the vulnerable. These choice-effective, efficient and better quality products will give India the opportunity to become the supplier of intermediate and finished goods in the global economy. Since the coivd-19 pandemic, most of the global economies are looking towards allies apart from china. Similarly this will boost foreign direct investment in India and provide work for the informal sector and explicitly to the global poor. This revival will give the vulnerable ?Work? and hence help the state in alleviation of unemployment in the medium term.

Conclusion

The pandemic led lockdown is inflicting a generalized disruption of both formal and informal activities. Since this is an uncharted territory and a one of a kind health epidemic, it would be na?ve to anticipate the damage and scale of such a pandemic, but given the fact the vulnerable will be the most affected as they lack basic amenities as well as have no social or monetary backup to survive without work. They have time and again looked at the state and the civil society for help. It will be the state who is being tested for their egalitarianism as well as their welfare outlook.?

Sachin Bharat Bahule, Assistant Professor of Economics, Nowrosjee Wadia College Pune?

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