This Article is From May 17, 2020

20-Lakh Crore Package Revealed In Full. The Core Is Hollow

On a day when 26 migrants were killed and more than 30 injured in truck accidents on their painful journey home, India's Finance Minister was talking about opening up space exploration and travel to the private sector. This is not just bizarre, it shows the utter contempt of the ruling regime for the pain and suffering of crores of Indian citizens and workers, the creators of wealth, reduced to trekking hundreds of miles, crushed into crowded trucks, buses, any transport, in attempts to get home. They were not on the mind of the Finance Minister. She was in more lofty climes. The contrast of that reality and the words of the Finance Minister just about sums up the nature of the package of 20 lakh crore rupees so grandly announced by the Prime Minister - all up in the air.

Let's be clear. This additional package does not contain a single paisa to be directly transferred to the poor or to the workers who have lost their livelihood due to the lockdown. Remember how the Prime Minister mentioned specific sections of the working poor in his speech? How happy were street vendors, domestic workers, fisher people, and others he had named? But what did they get? An offer of loans and a cruel homily from the Finance Minister that Modi-ji's  government believes in empowerment not entitlement. It hardly needs to be said that entitlement is reserved for those corporates whose bank loans worth 7.5 lakh crore rupees can be written off since they have the right credentials.


Finance Minister Nirmala Sitharaman addressed the fourth part of her press conference on the economic stimulus package on Saturday.

Does it make sense to ask those who have had no income for two months, who have most likely already borrowed money to get by, to take more loans? An outright transfer would have ensured that they could buy provisions and start their work. Of India's workforce of around 40 crores, 93  per cent are in the unorganized sector with extremely fluctuating incomes even at the best of times. The lockdown has devasted their livelihood. Along with most opposition parties, well-regarded economists across the globe have proposed that the government should make substantial direct cash transfers to the Jan Dhan or MNREGA bank accounts of these sections of the population for the next three months. This makes not just ethical sense but economic sense too. It will increase purchasing power, generate demand and help the revival of the economy. This would be truly "local being vocal". The government has ignored this proposal.


26 migrants were killed and more than 30 injured in truck accidents in Uttar Pradesh's Auraiya district on Saturday.

The Prime Minister chose to play with statistics when he announced that the package was 20 lakh crore rupees. It was not. What had been included was additional liquidity injected into the system through a number of steps and measures taken by the RBI from February to March adding up to more than 8 lakh crores. It also included the 1.7 lakh crore package announced in March. So, it was not 20 lakh crores but half that amount. But the  question is even of this entire amount of 20 lakh crores, how much is actual expenditure of the government as opposed to the "stimulus" package which is going to be entirely born by public sector banks and institutions like NABARD? For example, in the announcement for workers made by the Finance Minister, the additional expenditure of direct benefit to the poor is just 3,500 crore rupees. This is the amount for the additional  free foodgrains for an estimated 8 crore migrant workers who do not have ration cards. Here too lies a story. The government had earlier cancelled over 3 crore ration cards, mostly of genuine card-holders belonging to the poorer sections, without any physical verification, terming them "bogus" as they did not match Aadhar biometric standards. Now the same government claims it is a generous gesture to give those without ration cards free foodgrains!

Another method the government has used to inflate the amount it claims to be spending is to include in its expenditure money to which it has no claim. For example, the expenditure from the Construction Workers Fund, the District Mineral Fund or the Compensatory Afforestation Fund (CAMPA). As far as CAMPA funds are concerned, the irony of claiming it as an indication of government care for Adivasis was lost on the Finance Minister but not on India's tribals. First, the government grants permission for takeover of forest land to corporates, the felling of trees, and the displacement of Adivasis, all without their consent; having done so, it uses what is akin to blood money to give them jobs in plantations which are being grown on their usurped land! The government also has no problem with recycling its schemes and allocations already accounted for in budgetary allocations and claiming them as part of the Covid package. For example, the money spent for cash transfers of 2,000 rupees to kisans mentioned in the March package. The Finance Minister admitted that this was so but declined to give more details.


Thousands of migrants are making the journey home by foot or by road.

A cruel blow was against farmers. At a time of crop losses, of added expenditures, of sales below MSP prices, the Government refused to give a waiver of loans or to increase the MSP. To add insult to injury, statistics were trotted out to show how much the government has done for rural workers during the lockdown period.  For example, the Finance Minister claimed that there was a 40-50 percent increase in workdays provided under MNREGA during the lockdown. A quick look at the official site shows an opposite picture: there was a reduction of 59 percent in workdays and 46 percent in households covered in the month of April compared to the same period last year - a case described by the old saying, "statistics, damn statistics and lies". 

Even in the 5.4 lakh crore package announced for the MSMEs, the actual cost to the government is estimated at just 25,000 crores. The Finance Minister was put in a spot when she was asked how much was owed to this sector. Nitin Gadkari had in an earlier interview revealed that MSMEs were owed more than five lakh crore rupees, almost the exact equivalent of the package!

Why is the government being so coy about giving the figures? In fact, it has refused to do so. When asked at today's press conference what the cash outflow would be and why it was not being given separately, the Finance Secretary answered this was the practice all over the world. Even if this were true, if other governments do not believe in transparency, why mimic a bad practice? The reluctance to give the actual expenditure is because even the highest estimate puts cost to government at just 4 lakh crores or 20 per cent of the package. This too seems an overestimate. It is based on the statement issued on May 8, that central government borrowings for the year will be increased by 4.2 lakh crores, which therefore is the amount the government would be spending on the Covid package. It is more likely, however, that the increased borrowing is to cover the huge revenue shortfall which is going to occur because of the lockdown. 
Going by the breakdown available in some of the releases of the Press Information Bureau, and also estimates made by various commentators, the government will not be spending more than 2 lakh crores rupees. This is far from the 10 per cent of GDP claim. It would be just around 1 percent. Even going by the highest estimate of 4.2 crores, it would be just a bit over 2 percent of GDP - among the lowest cost to government expenditures in any Covid relief packages in the world.

The entire package has also failed to address the problems of state governments who are in the frontline of the fight against Covid 19. Even when announcements were made about increasing their borrowing limits with conditions, no commitment was made to pay the GST compensation owed to states. 

The truth is that the entire package is designed not to help workers and the poor but to push forward the government agenda of pro-corporate reforms. This was encapsulated by the Prime Minister's coinage of the four Ls: labour, land, laws and liquidity. The lockdown is being used to promote further concentration in the control over the nation's economic resources and to reverse basic rights of the working people. Nine state governments have diluted labour laws, including the extension of working hours to 12 by some. Three governments led by the BJP have suspended many labour laws for three years, basically turning workers into slaves. The dilution of the framework of environmental impact assessments in the new draft posted on the MOEFCC website, as well as the liberalization of regulations related to mining, presages a new phase of forcible acquisition of land, including forest land. The so-called reforms in the agricultural sector will make farmers more vulnerable to the manipulations of prices by big agribusinesses while weakening the system of government procurement at a guaranteed MSP. It is a strange definition of self-reliance that the government  is liberalizing all sectors to allow foreign investment, putting up the public sector for sale, smashing the core of India's self-reliance.

The package is a hoax. Soon enough, the workers and kisans of India will, like the child in the fable, exclaim that the emperor has no clothes.

Brinda Karat is a Politburo member of the CPI(M) and a former Member of the Rajya Sabha.

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