The central government has given effective financial help of 10 percent of GDP to rebuild the economy amid the corona crisis. The cost of recession will be high and long term. We have 40 crore unorganized workforce, this labor force needs to be strengthened. Farmers and others can be paid in advance through various social schemes like PM Kisan.
For your information, tlet us tell you that this is a good time for the poor and the underprivileged for at least the next six months for basic income. Assuming that the government pays all its temporary laborers and farmers Rs 5000 per month for the next 3 months, then its cost will be less than 4 percent of GDP. This direct benefit transfer will revive high demand and growth in the economy. However, distributing small amounts of money to the underprivileged will not be enough to bring the economy back on track. We need big and inclusive financial spending to strengthen the rural infrastructure.
In this situation it should be augmented by creating a framework that focuses on creating productive assets and demand. The MSME sector, which provides lakhs of jobs, needs immediate and major relief. They give employment to 12 crores and contribute 30 percent to GDP. The government should make provision for GST payment to be made on collection of bills instead of sending invoices. This step alone will provide 15 percent more and provide liquidity of about 6 lakh crores. A study shows that the government and state-owned institutions owe Rs 3 lakh crore to MSMEs.
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