April , 2020
The decisive shift is needed to combat the crisis
21:03 pm

Kishore Kumar Biswas

The present global economic situation - following the coronavirus pandemic - is an eye-opener. It may lead to question the basic economic development model.

Some economic commentators are of the view that Indian economic policymakers have taken several war-like measures to mitigate the crisis. Some other commentators have compared it with the Great Depression of the early 1930s. It is true that the epidemic is not choosing its victims based on class. However, it is the poor and marginalised who remain the most vulnerable targets.

Presently, it is the Indian working class and daily wage earners who remain the most susceptible following the 21-day lockout - announced on March 24, 2020 with a notice period of only four hours. Such a style was also adapted during the announcement of demonetisation in 2016. Prime Minister Narendra Modi’s address had no clear words of responsibility to assure India’s working class –many of whom are daily wage earners. For many of them, the announcement was a bolt from the blue.  

Size of the Indian working population

Professor KP Kannan, former Director, Centre for Development Studies, Thiruvananthapuram, has recently stated in an article published in the Economic and Political Weekly in April, 2020, that as of 2018, India had about 461 million workers with 80% of them working in the informal sector. This includes agricultural workers and workers from the MSME sector. He had put the figure of workers in the informal sector at around 369 million and stated that there are around 92 million workers in the Indian formal sector but around 49 million of them are employed as informal workers (temporary, contractual etc).

Going by the employment figures for India, close to 52% of the country’s workforce is in the self-employed category.  This comes to around 238 million and the number of casual workers is placed at around 112 million. Together, they constitute 350 million workers who form the core of India’s informal labour base. The remaining 19 million workers and 49 million informal workers – in total 68 million – can be categorised within the formal category. According to a Ministry of Labour report published in 2019, two-thirds of informal workers in India (60% of all Indian workers) – around 278 million - do not get the recommended `375/per day scale to meet their basic household needs at 2017-18 prices.

Impact of lockdown on labour

When the lockdown was announced, lakhs of migrant labourers landed in big problems. Many of them were terribly exposed and vulnerable. A considerable portion of migrant labourers are not only poor but also belong to marginalised social categories. Heartbreaking images were aired by the electronic media of lakhs of migrant labourers walking back to their villages – hundreds of kilometres away – as the lockdown stalled all modes of public transport.  Initially the condition was very grim, with no food or shelter being arranged for these migrant workers. Later some civil society organisations and political parties came forward to help. Reportedly, 25 people lost their lives as they were forced to move back to their native villages. The government eventually understood the magnitude of the situation and arranged for food and vehicles for these estranged labourers.   

 Need for a policy shift

In the backdrop of this pandemic, the greatest act of love is to stay away from the objects of one's own affection. Intellectuals, formal workers, and managers are able to operate through emails and teleconferencing. They can continue with their business while being quarantined at home. The same luxury is unavailable for India’s massive informal sector – a sizeable portion of which is daily wage earners. This is a fact that needs to be recognised and addressed by the government. There is a pressing need for a new development policy.

A paradigm shift                            

There is an urgent need to strengthen an inward-looking development policy. Production of goods used by the common man needs to be promoted. The foreign trade centric development policy maybe diluted for the moment. The focus on inward-looking development policy will also augur well for employment generation. Secondly, India has to develop a vibrant health facility system. The health insurance-based market-orientated approach needs to be revisited. Lessons should be taken from the recent failure of the market driven American health system. India’s share of governmental spending on health should be elevated to 5% of GDP. Thirdly, there is need to enhance and strengthen job creation programmes like MGNREGS. These programmes should be implemented meticulously. Fourthly, direct cash transfer policy needs to be initiated. Fifthly, there is need to relax fiscal deficit norms. Higher fiscal deficit does not necessarily hamper development. Sixthly, a more progressive income tax policy needs to be implemented to check the rising income inequality in India.  Lastly, for migrant workers, all Indian states will do well to replicate the Kerala model where the state government is trying to provide shelter at a reasonable price, issuing ration cards, extending health and education facilities to the workers and their families. 


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