India will require bold measures to emerge stronger from the Covid-19 crisis, suggests a report titled 'State of Working India 2021, One year of Covid-19' by Azim Premji University. So far, India's fiscal response to Covid, which is around 1.5-1.7 per cent of GDP, has been conservative, says the report.
India is gripped by a massive second wave of Covid-19, which has brought the healthcare infrastructure to a standstill. The Azim Premji University report says the impact of the second wave is still unfolding and may be as "large, or larger than those we report for the first wave".
It said the second wave can lead to potentially larger impact on work, incomes, food security, health and education cause it's coming on the back of depleted savings, debt, and reduced fallback options.
The most-affected states are severely strained in their finances, which makes it compelling for the Union government to undertake additional spending now, it said.
In its proposals, the report states the Centre should extend free rations under the PDS at least till the end of 2021; cash transfer of Rs 5,000 for three months to vulnerable households; expansion of MGNREGA entitlement to 150 days and revising programme wages upwards; launch a pilot urban employment programme in the worst hit districts, possibly focused on women workers; increase the central contribution in old-age pensions to at least Rs 500; automatically enroll all MGNREGA workers who do construction work as registered workers under the Building and Other Construction Workers (BoCW) Act so they can access social security benefits; and a Covid hardship allowance to 2.5 million Anganwadi and ASHA workers of Rs 30,000 (5,000 per month for six months).
These measures will amount to around Rs 5.5 lakh crore of additional spending and bring the total fiscal outlay on Covid relief to around 4.5 per cent of GDP over two years.
"We believe that this large fiscal stimulus is justified given the magnitude of the crisis," says the report, adding that failure to take action now will cause short-term hardship to continue and may compound the long-term effects.
The report proposes a framework for a National Employment Policy, which includes the promotion of public investment in social infrastructure as well as the facilitation of private investment.
These, together with a comprehensive social security infrastructure that includes rights-based entitlements, portable benefits, and empowered worker welfare boards, can tackle the persistent problems of low earnings, low productivity and precarity, adds the report.