A deeper look into Kerala’s 20,000-crore relief package to beat COVID blues

With the economy on the verge of collapse, the state government has taken three immediate steps: cash relief to BPL families, a consumer loan scheme to be managed by women, and a push for rural employment guarantee schemes.

Kerala has received kudos for its proactive measures in this time of COVID19 crisis. First in tracking corona patients and their contacts and creating adequate testing, treatment and isolation of potential victims and the other steps like setting up screening in railway stations to contain the spread of the virus. And the second, for being first state to announce a Rs 20,000 crore economic package providing relief to the poor and other vulnerable sections of society who have been hard hit by the virus spread.

Critics have described the measures as a sop to woo voters for the local body elections scheduled later this year. But Chief Minister Pinarayi Vijayan does deserve credit for the quick action and the realisation that the fight against the virus will be a long and gruelling one. His statement that “life of ordinary people has seriously been affected and the economy is in ruins by the outbreak and the government is making all efforts to help people survive in the stressful time,” was by no means an election stunt.

The emphasis of the economic package is to immediately put cash in the hands of the people by setting apart Rs 2000 crore for consumer loans to revive the state’s economy which is on the brink of collapse. This Rs 2000 crore will be made available through Kudumbashree, a women’s self-help group with five million members. This is to ensure that it is the women of low-income families who will control how it is used. Kudumbashree was made the implementing agency of an interest free loan scheme post the devastating 2018 floods too. However, the Chief Minister did not say clarify whether the current loan scheme would be interest-free like the flood loans. Only that the scheme would benefit more families.

Thrust on creating rural jobs

  • The priority is to revive the rural economy for which the government has earmarked Rs 1000 crore each for rural job employment guarantee schemes during April and May.
  • The government’s immediate goal is to push up the purchasing power of lower income groups. Disbursing social security pensions amounting to Rs 1320 crore for two months in March itself means five million low income people will get immediate cash relief. These pensions are normally disbursed in April.
  • Rs 100 crore has been earmarked for special assistance to BPL and Antyodaya families that do not get social security pensions. They would each get a direct benefit transfer of Rs 1000.
  • APL families would get 10 kg of rice during this period. This is an attempt to prevent hoarding by unscrupulous traders. Supplying rice to families, irrespective of their economic status, would cost the exchequer Rs 100 crore.
  • All arrears worth Rs 14,000 crore due to individuals and institutions would be settled immediately.
  • The last date for payment of electricity and water bills has been extended by one month.

Other relief measures

Finance Minister T M Thomas Isaac in his budget speech had announced opening of lunch outlets to provide meals at Rs.25. Now, the government plans to open 1000 outlets in April where lunch would be served at Rs 20. The reduction in price will cost the exchequer Rs. 50 crore.

A Rs.500 crore health package too was announced, though no details are available as of now.

The government has also given some relief to taxi and auto drivers, who have seen their income drying up, by waiving fitness charges for their vehicles. In the case of buses, state carriers have got a full tax waiver for April while private contract carriers would pay less tax for the next three months. Cumulative cost Rs 23.61 crore.

With all screening centres closed, the state’s film industry too has got some relief in the form of exemption from entertainment tax, a demand the industry had been making for quite some time. However, it not clear whether this is a temporary or permanent relief.

Though the package has been welcomed, critics point out that early pension and clearance of dues had to be paid anyway and is not in any way an additional allocation. But most have welcomed the decision to pay ₹1,000 as a direct handout to families below the poverty line and to those who belong to the Antyodaya schemes. The finance minister has also said that he is planning to spend at least half the loan amount of Rs 25,000 crore sanctioned by the centre for the next fiscal year in April-May itself on these schemes.

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