Covid-19 pandemic: Govt may extend social and rural relief schemes

Aims to provide impetus to rural economy and small businesses

The Centre is considering extending and relaunching some social and rural relief schemes it announced during the first wave of the Covid-19 pandemic to provide impetus to the rural economy and small businesses, said two people in the government.

The government is also looking to launch a portal dedicated to providing immediate relief to people working in the unorganised sector.

This comes as the Centre braces for the impact of the second wave, which is expected to hit rural demand harder, despite forecasts of record agricultural production and a normal monsoon.

“We are assessing the performance and outcomes of some of the rural-centric and small business schemes and whether it could be relaunched and extended for some more months,” said a government official privy to the discussion.

This could include the renewal of the employee provident fund scheme under Atmanirbhar Bharat Rozgar Yojna, with some tweaks. Under the scheme, the central government provides subsidies to establishments for new recruits. It would cover provident fund contributions of employees and employers for two years.

Apart from that, the government is considering extending measures like the Pradhan Mantri Gareeb Kalyan Anna Yojna, under which 5 kg of ration is being given free of cost. This scheme is set to end next month.

Additionally, it may consider direct transfer of some monetary benefits, officials said. “If at all the Centre decides to do something it will be through ex-gratia relief using Jan Dhan accounts like it did during the first wave. It had first announced an ex-gratia payment of Rs 500 to each woman accountholder for three months from April 2020. Extra free LPG cylinders along with free foodgrain were part of the same set of measures. Over 400 million Jan Dhan accountholders were eligible for the one-time dole amounting to Rs 1,500 for three months,” the officials said.

Some of these announcements are expected this month as states have started easing restrictions. Sources said that the government is focussing on immediate relief, instead of long-term policy to boost demand. And unlike last year, it may make the announcements in parts and not as a mega stimulus package.

In a recent paper, economist Jean Drèze, who teaches at Ranchi University, and independent researcher Anmol Somanchi said in transfers of Rs 500 to women in April-June 2020, not only were nearly 40 per cent of poor households left out because they did not include an adult woman with a JDY account, but roughly a third of women with a JDY account were also denied benefits.

Speaking on the fiscal stimulus while briefing the media on Monday, Chief Economic Advisor KV Subramanian said: “There is an uncertainty that India would achieve double-digit growth in FY22. The second wave has moderated the recovery momentum and it may impact rural demand. However, at this point I can’t give quantitative analysis on growth. Also that there is an urgent need to contain the spread of pandemic – vaccination and strict observation of Covid-appropriate behaviour. Besides, continuous monetary and fiscal policy support is needed.”

With Covid deaths rising sharply in the second wave, particularly in rural areas, several experts, policymakers, and opposition parties have called for directly benefit transfers to the poor to kick-start consumption again and provide much needed income support.

State governments have already started making such transfers for Covid relief to vulnerable sections of the society, including daily wagers and labourers.

The Centre too has announced some relief measures, like its recent decision to transfer its share of the cooking cost component in the mid-day meal scheme directly into the bank accounts of about 120 million children. The project will cost the Centre around Rs 1,200 crore.

In case of MGNREGA, sources said demand for work will be the key determinant for additional allocation.