Some out-of-the-box ideas for a fiscal stimulus

The pandemic and lockdown have deeply hurt the economy. This year the world’s economy will shrink by 3 percent, something that we have not witnessed in our lifetimes. India too may shrink as much if not more, since our lockdown has been more stringent than other nations. During April more than 120 million people lost jobs, and some of them permanently. More than ten million urban workers and their families reverse migrated to their villages or home towns, partly because they had lost their livelihoods. These workers will return to cities and factories after the re-opening of the economy, but also when there is an assurance of jobs. Else the rural areas are a better bet during the recession. There has been a bumper rabi crop (spring harvest). The procurement of wheat in Punjab, Haryana, and U.P. has been very successful, meaning farmers have received the minimum support price. Even Madhya Pradesh procurement is at record levels. Besides this income, the PM-KISAN scheme launched last year has been putting some money in farm households. Additionally, the small payment to rural women has helped, and so has the PDS foodgrain allocation through the ration shops, again benefiting the rural areas. Finally, there is the rural employment guarantee scheme (MNREGS) whose allocation has gone up to 1 lakh crore rupees, and which will certainly act as an additional income buffer for many families in rural areasRead more