Home >Opinion >Columns >Opinion | PM Modi’s 1.7 trillion virus relief for India’s most needy 60%

The Union government on Thursday announced a staggering 1.7 trillion package to mitigate the brunt of the 21-day lockdown on 800 million people. It has in the process hit the right notes with the optics, no doubt, and at the same time prioritized its economic strategy to be one about protecting the most vulnerable.

By sheer scale, it dwarfs the fiscal stimulus undertaken in the last big crisis—the 2008 global financial meltdown. More impressive is the rare alacrity with which the Union government, headed by Prime Minister Narendra Modi, has moved to deliver the relief—without worrying about the attendant fiscal costs—to those at the bottom of the social pyramid, which was already struggling from the fallout of a rapidly slowing economy.

The package is designed to cover the most vulnerable cohorts: farmers, construction workers, women and emergency personnel working on the front line to tackle the Covid-19 spread.

Implicit in the details are three key clear threads which suggest that the government has a game plan about the Covid-19 challenge.

First, by identifying 800 million beneficiaries, it has gone beyond the traditional bureaucratic benchmark—below the poverty line. This is very important as public policy cannot afford an error of omission; it is always better to offer benefits universally with a clear cut-off to leave out the rich. At present, the benefits cover 60% of the population and hence seems fairly comprehensive.

Second, flowing from the above, it is clear that it has made the poor the centrepiece of its economic strategy. Not only is this good politics, but it is also good economics; if the poor are economically disenfranchised, the bottom will come off the consumer economy. Through the lockdown strategy, it has chosen to protect human lives, and by focusing on the less well-off, it is fighting off plausible impoverishment of those in the line of fire.

Third, by limiting the package to three months, it has basically concluded that the challenge would fade in this period. This is hugely significant as the rest of the economy will take the cue and ready for post-Covid 19 phase. More importantly, it signals light at the end of the tunnel.

In sum, it is clear that the government has started off with a good game plan. As they say, anything well begun is half done.

Anil Padmanabhan is managing editor of Mint and writes every week on the intersection of politics and economics.

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