Two policy options — a one-time cash transfer, and provision of basic food supplies per person from the public distribution system for three months before some industrial activity restarts — can help tackle the migration labour problem, according to a report.
Tackling the migration labour problem is partly economic and partly administrative and the respective states would have to scale up testing and medical facilities to contain the spread of the pandemic, and immediately provide a one-time financial relief that can partly offset the wage loss, a joint report by the Council on Energy, Environment and Water and the National Institute of Public Finance and Policy said.
However, providing such relief will require identification and a direct benefit scheme and “two policy options would be most effective in such a situation — a one-time cash transfer, and provision of basic food supplies per person, from the PDS (public distribution system) for three months, before some industrial activity restarts,” it said.
It said distributing money through direct benefit transfer (DBT) and food via the PDS will adversely impact the finances of state governments, especially in Uttar Pradesh, Bihar, Jharkhand and West Bengal, as they are home to almost all migrant workers.
“However, this fiscal measure is an essential relief intervention to prevent millions of workers and their families from slipping into further distress,” it said.
It said the road to recovery from the Covid-19 pandemic depends on the exit strategies from the lockdown and post-lockdown public finance would have to focus on two areas — fiscal stimulus to alleviate the adverse impact on firms, self-owned enterprises, and migrant workers; and structural economic recovery through stabilisation of financial institutions and inflation rates, and increased rate of economic growth.
Factory and establishment survey is critical to assess employment conditions in organised as well as unorganised sectors and a quick survey of registered factories and informal self-owned enterprises could estimate the extent of job loss and likelihood of closure.
On charting a strategic road to recovery, the report said formulating a post-pandemic recovery map for India requires assessing the immediate distress to daily/ casual workers in sectors that have taken the maximum brunt of the lockdown, and preventing the closure of firms and establishments in the near future.
“The government’s much-needed, major economic package of Rs 20 lakh crore (USD 263.5 billion) requires some more clarification: What measures will contribute to the recovery package? How will those contributions be funded? How will the resources be spent?” it said.
For MSME, it suggested to identify micro, small and medium enterprises and their workers, development of a vulnerability assessment framework of the MSME sector, increase capacity of the SAMADHAAN system, a delayed payment monitoring system, to expeditiously clear government dues and improve creditworthiness of small businesses.
The MSME ministry should build an accurate, scalable, and real-time information system to identify and serve genuine beneficiaries of government schemes and aid, it said adding that it is imperative to take a fresh census of MSMEs and issue them a unique business identification number (UBIN) so that they can be recognised and referenced MSMEs can be segregated at national, state, or sectoral levels.
The government should mandate the lenders to introduce a mechanism to track the fund utilisation and financial health of the borrowers on a monthly basis, and intervene at the first signs of distress, it said adding that there is an urgent need to increase bench strength of the National Company Law Tribunal (NCLT) to address the peak in bankruptcies.
On trade front, the report said the immediate requirement is to identify the goods categories which lie in the suspicious category of violating the rules of origin country of the trade agreement between India and ASEAN countries.
“To revive the manufacturing sector and protect domestic industries from dumped imported goods, India must urgently enforce and track the 35 per cent minimum value addition requirement,” it added.
Further, it said the government’s decision to restrict foreign direct investment (FDI) from countries sharing land border with India can impact citizens, companies and investing entities of seven neighbouring countries, but is expected to mainly address apprehensions of Chinese firms taking over financially stressed Indian firms in the wake of the pandemic.
The other suggestions include creation of an environment and health de-risking mission to focus on risks posed by climate change, air pollution, chemicals, and antimicrobial resistance, and develop a climate risk atlas.