Rolling Back the Induced Livelihood Shock

Context: Specific policy measures needed to reverse the lockdown-created trauma and stop it from falling into chronic poverty.

Pre-pandemic poverty statistics:

• 42% or around 56 crore people were “officially” poor before the lockdown was announced – Periodic Labour Force Survey and state-specific poverty lines based on Tendulkar Committee recommendations.

• Around 20% of people live within a narrow band of the above poverty line.

Impacts of pandemic induced lockdown:

• Poverty deepening: Estimates from the Periodic Labour Force Survey data suggest that about an additional 40 crore people were pushed below the poverty line due to the lockdown.

• Issues in urban economy: Massive reverse migration flows out of the urban informal sector results in hiccups for the economy in the post-lockdown scenario.

• Inadequate state responses: in the economic stimulus package announced by the government.

• Token increase: of National Rural Employment Guarantee Act wage by ?20.
• Exclusion errors: IT-based attempts to universalise public distribution results in high social costs in the form of accentuated hunger.

Way Forward:

• Revamping  MGNREGA: The revamped scheme to provide 90 million workers guaranteed employment of 20 days of work/month for at least the next six months.

• This means an additional financial stimulus of ?1.6-lakh crore.

• Universalisation of the Public Distribution System: needs better equity focus in implementation. 

• At local level, identification of most vulnerable and including them in the programme is needed. 

• Stabilising urban economy: Urban employment guarantee programme implemented through municipal corporations needed to stabilise the urban economy.

• This can be used to develop key social infrastructure in urban areas including slum development, drinking water supply, toilet construction, and urban afforestation.
• The wages could be fixed with a 30% premium over the prevalent MNREGA benchmark.
• Revival of small and medium enterprises: Promote employer-contractor facilitated programmes to provide wage subsidy of an equivalent amount can be considered.