- The pandemic-induced social hardships on humanity might take considerable time and length to elaborate in detail needs no further emphasis. Reams and reams have already been written and will continue to be written on the damages, destructions, devastations, and loss of lives as well as livelihoods is a common refrain heard from different corners. On its part, the Government of India has time and again came out with mitigating measures like financial stimulus packages to buffer the existential challenges wrought about by the pandemic. Now, how many sectors, verticals, businesses, and individuals have derived benefits out of the various schemes announced as part of the Atmanirbhar Bharat campaign is best left to the imagination of the concerned.
PC: Komal Pattanayak
- No harm in dissecting the available outcome, though. As you are aware, the country’s labor workforce landscape is dotted with an unorganized sector forming almost 88 to 92% which poses a huge challenge insofar as extending benefits to ensure decent living standards for the affected. Against this backdrop, research by the State Bank of India (SBI) estimates household debt during the pandemic year 2020-21 getting increased by almost 5 percentage points to 37.3% of Gross Domestic Product (GDP). The report also concluded that household savings may have gone down further piling on the pressure to stay afloat amidst challenging times.
- This data lends credence to anecdotal evidence that the combination of economic hardship and emergency health spending has taken a big toll on the household budget. Of course, between the first and second Covid wave where the country rejoiced prematurely for almost returning to normalcy showing signs of recovery, did not provide a fillip to consumption spending eventually turning out to be nothing more than dismal. In other words, the SBI’s data is another stark reminder of the faulty logic of the Government of India’s series of economic recovery packages not reaching the intended beneficiaries.
PC: Suzaan Beneke
- Since, there is no worthwhile financial cushioning to ride out shocks as most of our workforces mainly live on financial margins, the impact on their sustenance is predictable. The GOI’s Periodic Labour Force Survey (PLFS) demonstrated that in 2019 almost 52% of the workforce was self-employed. In urban areas about 32% were self-employed. As can be seen, this segment of the workforce as well as those employed in small establishments is the hardest hit having received no direct government benefits. Trust me, they are unlikely to rush to borrow money just because GOI offers a credit guarantee by involving microfinance institutions (MFIs). Also, note that banks are not lending on the expected line despite guarantees extended to many sectors.
- Despite GOI’s several credit schemes on MSMEs, the credit growth in micro and small industries is 3.8%. People in distress who have had to borrow earlier are even more unlikely to be attractive as borrowers or find the confidence to take on a further loan to recoup. Ground realities provide an entirely different picture as a high-debt, the low-income household economy will benefit from direct income transfer rather than financial intermediation and deferred fiscal commitments failing to invoke desired confidence. Therefore, the Government’s fiscal managers should do a rethink to come out with measures ensuring the availability of substantial and steady income, including direct benefit transfer.