A plan to revive the broken economy

Context: In reference to revival of the economy restrained by the lockdown, certain fiscal measures can be taken securing rights and livelihoods of the citizens as focal point.

Food and cash transfer

• Providing every household with Rs 7000/ month for 3 months and 10 kg grains per month for 6 months costs only 3% of GDP.
• Source: Financed by borrowing from Reserve Bank of India, plentiful grains availability with FCI and rabi procurement. 
• Immediate Impact: low demand due to truncated multiplier expenditure, will enabling only current demand to continue and no new demand creation (controlled inflation), expanded output after normalcy and will create effective demand in local markets.

Tackling unemployment

• Revamping MGNREGA:

• Removing the 100-day limit per household, demand-based work availability, inclusion of agriculture, construction work and rural enterprise and care activities.
• Use MGNREGS to pay wages for land development and farm work for small and medium farmers

• Promote Agricultural growth to generate substantial rural employment

• Government support through remunerative procurement prices, subsidized institutional credit, other input subsidies, and redistribution of unused land with plantations.
• Agricultural growth will create demand for their products and by providing inputs for them to process.

• Urban Employment

• Introducing Urban Employment Guarantee Programme including for educated unemployed, work in MSME, care work (old, disabled, educational activities etc.).
• This measure will not only revive investment (as done in private sector by easing labour laws) but also spur demand in the economy and ensure labour supply.

• Care Economy

• Importance of public healthcare and folly of privatisation of essential services have provided “care economy” immense scope for increasing employment.
• Vacancies in ASHA and Aganwadi to be filled, improving their status, proper remuneration, expanding their coverage in urban poor.

Generating Revenue

• A combination of wealth tax and inheritance tax and a unitary system of taxation for both multinational companies and local ones.
• Additional revenues to be captured form fresh issue of special drawing rights by IMF

Conclusion

• All these steps would be sufficient to guarantee 5 universal justiciable fundamental economic rights: right to food, right to employment, right to free public health care and right to old age pension.