Inadequate stimulus package for MSME and Farmers Insufficient investment in health system, shortage of emergency supplies and delays in domestic production of testing kits

SWAN Report 2020, a surveys of migrant workers after 1 month of lockdown found that most of them (96%) had not received food rations or cash relief from the government, while around 90% had not been paid for the period by their employers either.

According to the research wing of the State Bank of India, Of the Rs 2 lakh crore of direct fiscal impact, only Rs 76,500 crore (including free ration) involved direct money transfer to the people, which constitutes a paltry 0.38% of the GDP. 40

Additional ration for three months, cash transfer of Rs.500 in Jan Dhan account or ex-gratia amount of Rs.1000 to widows and disabled seem to be inadequate which were all announced only till June, whereas the effect of pandemic has been long term and is still continuing.

For the 14 crore migrant workers who were rendered homeless, without incomes, and without food at one stroke, and hence poured out in vast numbers onto the streets to go back to the only refuge they knew, namely their village homes, the announcement of the “rescue package” of Rs.1.7 lakh crore stands grossly inadequate. Of this, the fresh assistance in the Union Budget, amounted only to Rs.92,000 crore or less than 0.5% of the country’s GDP, which is far lower than of every other major country in the world.41

Inadequate stimulus package for MSME and Farmers

Over the 40-day lockdown period, MSMEs and industries otherwise permitted to operate had been constrained due to regulatory hurdles. Each continuous process, essential service manufacturer and other ancillaries and intermediaries were unable to break the regulatory lock jam with respect to receiving approvals from district administrations. There were a lot of instances where approvals for starting operations for a continuous process or their raw material supplier or their intermediary has been pending for over 20-30 days. All the regulatory hurdles and on-ground implementation issues were most adversely affecting the MSME sector in India.42 A major portion of the Atma Nirbhar Bharat Abhiyan (ABY) package totalling a financial support of Rs.20.97 lakh crores announced by the Government of India focuses on providing collateral few loans, credit guarantees etc. to farmers and MSME. This include,

- Upfront income support of Rs.2000 to the farmers through PM-KISAN scheme - Announcing Rs.3 Lakh crore collateral free loan with 100% credit guarantee

40 “Package of numbers, not relief”; T M Thomas Isaac, MAY 19 202 (web: https://www.deccanherald.com/opinion/main-article/package-of-numbers-not-relief-839620.html) 41 Patnaik, Prabhat (2020): "The Mendacity of Modi Govt's 'Rescue Package'", Newsclick, 23 May. Web: https://www.newsclick.in/Modi-GOVT-Rescue-Package-for-COVID-Sufficient 42 Singh Rudresh; May 05, 2020; “MSMEs in essential operations are locked out; implementation paralysis hurting small businesses”, Web: https://www.financialexpress.com/industry/sme/cafe-sme/msme-eodb-lack-of-coordination-betweengovt-and-on-ground-authorities-impacting-msmes/1948854/)

However, studies43 mention that for the farmers and Micro, Small, Medium Enterprises (MSME) sector, additional loans have been promised liberally but very little has been done to compensate their loss during the lockdown or to ease their debt burden. It is surprising that while the government has announced Rs. 3 lakh crores for providing credit, it has not yet paid MSMEs the amount owed to them amounting to as much as Rs. 5 lakh crores.44

Insufficient investment in health system, shortage of emergency supplies and delays in domestic production of testing kits

Research reports talk about the inadequate preparation of health systems, facilities and personnel during lock down period keeping the facilities like hospital beds, ventilators, etc. well below the need on one hand and ignoring treatment focus for people with long term diseases like TB, Cancer, Kidney ailment, Heart ailments etc. on the other hand. Insufficient investment in Health System and inappropriate distribution of funds to the states from center was another hindrance to cope with the pandemic. According to a study (CBGA, 2020), less than 0.04% of GDP were made available for immediate public health expenditure and less than half of that was distributed among states, in a rather arbitrary manner.

At the wake of pandemic Personal Protective Equipment (PPEs), especially masks and coveralls, are essential for the protection of healthcare workers, and are mandatory under WHO guidelines for Covid-19 treatment. The Centre had banned the export of PPEs on January 31, but allowed the export of raw materials for PPEs. However, according to Scroll.in investigation, the government had not placed any substantial orders for PPEs in the one and a half months since its ban on exports. Nor did it issue any specifications on the design, quality and testing of Covid-19 safety gear for manufacturers to start production. According to one estimate45, in place of the 38 million masks and 6.2 million coveralls that were required in India, only 9.1 million masks and 8,00,000 coveralls were available. The story was not very different with mechanical ventilators. According to one estimate46, India may require up to 1 million ventilators to deal with COVID-19, and has recently placed an order for 49,000 units.

Several independent experts have said that India was not testing enough for COVID-19 cases, which was because of lack of kits. The Centre’s attempts to start domestic production of testing kits but approvals process itself was started as late as 23 March, at a time when India had a total of 471 confirmed COVID-19 cases. Adding to this, ICMR guidelines on domestic testing kits issued on March 23, included an inexplicable condition that required domestic

43 “Package of numbers, not relief”; T M Thomas Isaac, MAY 19 202 (web: https://www.deccanherald.com/opinion/main-article/package-of-numbers-not-relief-839620.html) 44 Centre for Budget Governance and Accountability (CBGA). (2020). Numbers on the Edge: Assessing India’s Fiscal Response to Covid-19. New Delhi: CBGA. 45 https://www.firstpost.com/health/coronavirus-outbreak-only-9-1-million-of-38-million-masks-needed-to-fight-covid-19in-india-available-says-invest-india-agency-8202171.html 46 https://www.indiatoday.in/coronavirus-outbreak/story/covid-19-shortage-of-ventilators-iit-team-pitches-bag-valvemask-as-alternative-1661659-2020-03-31