As usual, PM's address was more of optics, rather substance. Like earlier times, he repackaged the stimulus using highfalutin words, but utterly failed to take care of the most important job at hand — that of directly transferring cash to the poor of both rural and urban areas, including the jobless. The central government defied all the novel suggestions made by the leading economists like Amartya Sen, Abhijit Vinayak Banerjee and Raghuram Rajan, instead opting for a shaky dependence on huge bank loan-based revival without taking into account the grim reality that nobody, even those who have funds, isin a mood to spend funds. The poor and the jobless, in staggering numbers, can be made to spend, and thus boost consumption, only through direct transfer of funds.

In fact, the country's economy was already crisis-ridden before the corona attack, due to the huge slowdown —a direct consequence of demonetisation, haphazard implementation of the GST as well as global trade problems. So, this double attack on the Indian economy needed a massive thrust to boost domestic consumption at this critical hour. The boost cannot be achieved without funding the vast majority of the rural and urban poor, including those who have lost livelihoods in the last two months because of the countrywide lockdown forcing millions out of their jobs, especially in India’s precarious but sprawling informal sector.

Since the first lockdown was announced on March 25,114 million persons have lost their jobs so far, out of whom 91 million are wage earners and about 17 million are salaried employees. This figure will go up further. They need cash in hand and that is not just one-way relief to them, but has the big potential to revive the demand for consumer goods. The consumption spike is absolutely essential now to start the process of reviving the economy. A minimum income of Rs. 4,000 per month for people below the poverty line, and the same amount for the jobless, can do wonders in reviving the domestic demand at this stage.

All renowned rating agencies have sarcastically commented that the PM's so-called Rs.20 lakh crore package is in effect nothing but 1 to 1.5 per cent infusion of funds, as against 10 per cent of the GDP claimed by the government. A leading analyst of UBS Securities found that the upfront direct fiscal cost this year from the Covid-19 support package announced so far is quite limited: about 1.2 per cent of the GDP. Fitch projects it at only 1 percent, as against the unreliable government figure of 10 per cent of the GDP.

The Universal Basic Income (UBI) issue has generated a big debate in the West, especially the USA where the issue of inequality has come to the fore in a big way. Prominent opposition leaders like Bernie Sanders in USA and Jeremy Corbyn in the UK have been talking about the economies being run in the interests of one per cent and promising to change the system to favour 99 per cent if they came to power. Even the capitalists of new generation like Marc Zuckerberg and Chris Hughes, co-founders of Facebook, have argued for UBI as not necessarily a comprehensive solution, but as at least a moderating analgesic for the severity of income inequality and poverty in countries, including global powers like America.

In USA, there is a fierce debate within the left about the suitability of UBI, but the overwhelming opinion is that this can be a starting point. UBI is already beginning to shift the people’s political convictions in directions that lead to democratic socialism. The programme is bringing the issues of class and inequality more into greater focus and making them integral part of the national conversation. Professor Tim Libretti argues in the US daily People’s World that the UBI is certainly not any ultimate panacea, but it is one way of strengthening vulnerable members of society in their struggle against capitalism. Interestingly Zuckerberg, while supporting UBI, in his address at Harvard, mentioned how growing up with financial security allowed him the freedom to pursue his inventions, explaining: “If I had to support my family, instead of having time to code, if I did not know I would be fine if Facebook did not work out, I would not be standing here today.”

That way, economic security is the most important component which encourages the spirit of innovation. In California Mayor Michael Tubbs of Stockton, has been able to implement a universal basic income in his city, with a plan to be piloted on a small scale beginning in 2019. What motivated him was precisely the socialist imagination of Dr. Martin Luther King Jr. which he has invoked explicitly recalling reading King’s “Where Do We Go from Here Chaos or Community” in which King calls for a guaranteed annual income.

Congress leader Rahul Gandhi included the minimum basic income of Rs. 6,000 per month to the people below the poverty line as a part of the Congress manifesto before the 2019 Lok Sabha elections. He is now calling for Rs. 7,000 a month for the poor, both rural and urban and this makes sense at this time of devastated economy. The amount can be reduced to Rs. 5,000 or even Rs. 4,000 per month, but this is of prime need now for saving the lives as also the tottering Indian economy.

Prime Minister Narendra Modi can still salvage the economy by including this new package as the sixth one to start the process of revival. His Rs. 20 lakh crore package can remain to protect his ego but this sixth package, if he really takes up, can act as a game changer and not just Indian economy and the people but also Prime Minister himself will accrue benefits from this. This is his last chance to give a boost to consumption and pep up demand.
(IPA Service)