The package announced by the FM today was spot-on. This is exactly what is required first – take care of those on the lowest rung or those who are not even on the economic ladder.
Taking care of the most vulnerable in the society today is the 100% perfect thing to do. The market probably expected the sky and moon but the Govt did right by announcing sops in a staggered, calibrated way.
Right now asking questions about the fiscal deficit or other macro economic ramifications would be foolish as we need to go all out and give whatever we can to keep people alive; the virus threat is there but we most certainly do not want a social upheaval or people dying of hunger.
The sops announced today: (they come into effect immediately, which will be 1st April)
- A Rs 1.7 lakh crore package that would largely benefit the poor who need immediate help like migrant workers and urban and rural poor.
- 80 crore poor or two-third of population would get 5 kg rice or wheat free for the next three months – this will be over and above the 5 kg they already get.
- Additionally, they will also get 1 kg of preferred pulse.
- Free gas cylinders for three months for Ujjjwala beneficiaries
- MNREGA wages hiked from Rs.182 to Rs.202 per day
- Govt to pay 24% EPFO contributions for three months for those enterprises which have employee head count up to 100 of which 90% earn less than Rs.15,000/month.
- Rs.50 lakh medical insurance cover for frontline healthcare workers
- Direct cash transfer through DBT - First instalment of Rs 2,000 of PM Kisan will be given in first week of April.
- An ex-gratia amount of Rs 1,000 for next three months available in two instalments for senior citizens and widows
- Women with Jan Dhan account to get ex-gratia Rs.500/month for next three months
- Women self help groups will get ollateral free loan up to Rs.20 lakh, doubled from earlier Rs.10 lakh
- State Govts told to dip into Rs.31,000 crore welfare fund to help out building & construction labourers undergoing economic disruption
- Directed the states to use funds in district mineral fund for testing activities, medical screening, providing health attention needed to fight the coronavirus pandemic.
- Provident fund scheme regulations to be amended to allow non-refundable advance of 75% of amount in account or three months of wages, whichever is lower.
Given the size of our population, this is an excellent move and the stock markets and the industry needs to wait their turn. They are not fighting to survive.
More likely, RBI might announce what the markets want and that could be either in April or much before that.
Right now, timing is very important; what is needed is the assurance that the economic disruption impact will be taken head-on by the Govt and companies, small and medium will not be allowed to go down.