Azim Premji varsity study pitches for COVID ₹5.5-lakh-crore stimulus package

Report says country’s fiscal response to the pandemic has so far been conservative

The report said the pandemic has led to a severe decline in earnings for the majority of workers

How is India coping up after a year of COVID? The picture is gloomy.

A new report by Karnataka-based Azim Premji University has painted a grim fiscal picture of the country, now reeling under the second wave of the COVID pandemic.

Stressing that the country’s fiscal response to the pandemic has so far been conservative, the report, released on Wednesday, suggested a ₹5.5-lakh-crore stimulus package to tackle the crisis. The report said the pandemic left a lasting impact on jobs, income, inequality, poverty, gender equality and even children’s education and nutrition.

“Bold measures will be required to emerge stronger from the crisis,” said the report titled ‘State of Working India 2021: One Year of Covid-19′.


The report said the impact of the second wave was still unfolding and may be as large, or larger than the first one. Further, coming as it does on the back of depleted savings, debt, and reduced fallback options, the second wave could lead to potentially larger impact on work, incomes, food security, health and education, it said.

The states, which are at the forefront of the pandemic response in terms of containment as well as welfare, are severely strained in their finances.

“There are thus compelling reasons for the Centre to undertake additional spending now,” it said. The report proposed extending free rations under PDS beyond June, at least till the end of 2021, and cash transfer of ₹5,000 for three months to as many vulnerable households as can be reached with the existing digital infrastructure, including but not limited to Jan Dhan accounts. It suggested expansion of MGNREGA entitlement to 150 days and revising programme wages upwards to state minimum wages, and enhancing the programme budget to at least ₹1.75 lakh crore. The report also proposed launching a pilot urban employment programme in the worst-hit districts, possibly focused on women workers, and increasing the central contribution in old-age pensions to at least ₹500.
A Covid hardship allowance to 2.5 million Anganwadi and ASHA workers of ₹30,000 (₹ 5,000 per month for six months) was also suggested, among others.
“These measures, taken together, will amount to approximately ₹5.5 lakh crore of additional spending and bring the total fiscal outlay on Covid relief to around 4.5 per cent of GDP over two years,” it said.

The report cautioned that failure to take action now will cause short-term hardship to continue and may compound the long-term effects leading to years of lost welfare gains, and increased poverty as well as loss of savings.

“Nutritional and educational deficits, occurring due to stressed household finances, can have long-term effects. Women leaving labour market can lead to long-term increases in already large gender gaps,” it pointed out. The report documents the impact of one year of Covid-19 in India, on jobs, incomes, inequality, and poverty, according to the report.

The report said the pandemic has further increased informality and led to a severe decline in earnings for the majority of workers resulting in a sudden increase in poverty. Women and younger workers have been disproportionately affected.

“Households have coped by reducing food intake, borrowing, and selling assets. Government relief has helped avoid the most severe forms of distress, but the reach of support measures is incomplete, leaving out some of the most vulnerable workers and households,” it claimed.

(With inputs from Agencies)