Rajasthan task force seeks Covid fund, incentives
A Rajasthan government task force has sought the setting up of a national coronavirus disease (Covid) management fund, the suspension of Central permissions for setting up industries, except highly polluting ones, and the deferring of repayment of all state development loans by three months to revive the economy and improve the state’s financial health.
For specific sectors, it has sought a revolving fund for self-help groups (SHGs), money as seed capital to provide financial aid to small and medium industries and a mandatory chief health officer to reassure people about safety, according to the task force’s report accessed by HT.
The report also quoted a study by the International Labour Organisation to say that around 90% or 400 million people working in the informal economy are at risk of falling deeper into poverty during the crisis. “The latest CMIE report on job destruction due to Covid-19 states that about 12 crore Indians have already lost employment over the first lockdown [sic],” the report said, adding that medium and small enterprises and the service sector were “staring at bankruptcy.”
The task force set up by chief minister Ashok Gehlot in the first week of April said that there would be a two to three percentage point decline in the Gross Domestic Product (GDP) growth, primarily because three of the four drivers of growth are seeing a huge “negative shock” in the first half of 2020. The three drivers that will see a fall are private consumption, investment and exports, the report said.
“A temporary lockdown can have a permanent negative impact, especially in agriculture, animal husbandry, fishing and the service sector… A national strategy to minimise the impact of coronavirus on the economy must, therefore, counter the above negative effects,” the report said.
The task force headed by economic advisor to the chief minister and former union finance secretary Arvind Mayaram had sought inputs from experts such as former RBI governors Raghuram Rajan and Urijit Patel, former chief economic advisor Kaushik Basu and industry captains such as Naina Lal Kidwai, chairman, India Advisory Board, Advent Private Equity, and Anil Agarwal of Vedanta Resources.
At the national level, the task force suggested ramping up the interstate movement of goods and services, the immediate transfer of all the budgeted amount of Central Sector Schemes and Central Sector funds to the states, suspending prior approval under Central laws for setting up industries except polluting industries falling under red category and a Covid debt mobilisation plan, in which the amount equal to 4% of the GDP can be mobilised.
The report also asked the Centre and the Reserve Bank of India to reschedule and defer all repayments and interests on State Development Loans (SDLs), for three months, with no penalty for deferred payment, and incentives to manage fiscal deficits, which are likely to increase in the current financial year because of the falling revenue and increase in Covid expenditure.
“The most significant impact that the GOI can have on fighting the economic downturn rests in this coordinated use of fiscal and monetary policy, which only the GOI can do as it has vested sovereign powers. It must recognise that the front-line battle, where resources are urgently required, is at the state level. Therefore, in the spirit of co-operative federalism, states should be trusted with untied resources,” the report said.
The report suggested introducing the position of Chief Public Health Officer (CPHO) to provide direction to medical, health and family welfare department staff, including medical professionals, scientists, and epidemiologists, as they plan and respond to the emergency, the report said.
To boost the MSME sector, the report suggested providing seed capital as grant in aid, in addition to Mudra loans. The MSMEs may also be supported with reimbursement of salaries for three months by the government or given GST credit equal to 50% of the workers’ wage bill of six months (to be availed over the next two years), the report said.
To support the local village economy, self-help groups (SHGs) could be given a revolving fund to lend money to their members as well as to migrants who have lost jobs because of Covid. The infusion of funds to the groups and their federations will meet their consumption needs and help them revive the livelihood of their members, as well as provide capital to improve consumption.
Although the suggestions of the task force are aimed at restarting the economy in Rajasthan, the officials said the measures can be implemented anywhere in the country. The task force report will now be submitted to the Central government as the state’s inputs for reviving the national economy.
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