Roti, Kapda aur Makaan in the Times of Corona: Cheap Credit, UBI & ETC

The corona pandemic has brought all life to a standstill. There will not be much roam for the governments to pursue enough reforms in terms of economic policy, yet the Reserve Bank of India is trying.

Certainly we are planning to move towards a more technologically sound nation today! All the technologies that we as workers in the economy saw that they will be unsustainable if introduced in India, and will not come to be even tested till at the least another 20 years, yet this pandemic has challenged the status quoist persons and today we are looking at one of the most spectacular disruptions in the history of mankind unfurling right before us.

Everywhere we are talking about introducing new methods of governing the economic intercourse which will annihilate and destroy many jobs. The labour intensive market will become more mechanised and we will see a clear contest between the economic classes struggling for survival.

The cheap credit that Mr. Shantikanta Das has proposed to offer through several technical manouverings in the money markets will not be able to make for the income losses that the economy will see in the short-term. The cheap credit might not be availed by many people, and not every employer as well avail of the cheap credit on offer.

The realities are far-flung, and today it is about lives in the aftermath of the lockdown where the neo-middle class will see a disruption along with the classes below them. All the people are about to reach a point where their savings will get exhausted and only a few people will be make it out of this scenario.

Many employers will not be in a position to make for the losses in their incomes and there will be no salaries paid.

The 90 day EMI holidays are absolutely inadequate given the fact that the average household savings rates have gone down over the years, which is very well known to the RBI today.

The cheap credit is not even available to all, since our informal economy is the largest employer many people will remain left-out and not have access to any funds to even approach the places they fled.

The governments are talking about subsidy cuts and other ways to save their expenditure, and save the national economy. It is an unrealistic desire.

Today, the government will eventually be forced to offer financial assistance which will be interest free in most cases, and might even be some kind of a Universal Basic Income along with other sops which will be in tune with the aim of the government to save the maximum lives possible.

The challenges will bear heavy on the minds of all the classes and actual problems will begin once the lockdown begins, yet there must be a blanket EMI holiday till July-2020, and many services will have to become affordable.

Many corporations will have to come down to a no-profit no-loss mode of business operations for sometime, and in the near term they will have to ban sale of liqour as well since it will create a drain on household budgets and increase the crime rates exponentially.

I respect Mr. Modi and other policy makers, certainly they are more wise and intelligent than this author, yet there is an entire gamut of disaster pot simmering which will come to boil eventually.

The restriction on FDI is a welcome step and Junior Gandhi ji was a wise man to maintain poise and suggest the move. Yet, the cap must not be there for China, money moves throught tax havens, and FDI must be halted completely for a few days, and we will have to live in a world with subdued global demand and consumption cycle.

Our mental health infrastructure and healthcare infrastructure in AYUSH will need a signifcant push.

PDS and UBI For The Poor:

The JAM trinity is not a very decisive and an impactful tool to offer ration and income support. What we need today is to provide temporary ration disbursal codes which are generated from the Aadhar or Bank Account Number.

We will also need to devise a universal basic income as mooted by several economists for a while which will guarantee some sort of assistance to the most needy in the most challenging years to have come for us post the liberalisation of 1992.

Our financial system will not be able to absorb the losses and the defaults in the cheap credit offerings in the medium term as well, where we need to be realistic is that the tenure of 12 months will be insufficient for the economy to pick up.

Saving and providing for Roti, Kapda and Makaan in the corona times will thus be more complex than the direction the Modi government is planning to walk upon. WMA will also be a disastrous exercise in the short term, while we must have serviced the states in some other manner, which being a simple author I wouldn’t suggest, yet we all know how to do it!