While We Fight COVID-19 Together, Let’s Share the Pain Equitably
COVID-19 has been the world’s greatest leveller. It removed distinctions between the rich and the poor—people and nations. Many world leaders had to be quarantined for exposureto, or have tested positive for, the virus. A week before the crisis blew up, European nations were confident that their healthcare systems were fully prepared and ‘sleepwalked’ into the crisis, says Reuters. They are now scrambling for protective gear, while the death toll runs into tens of thousands.
India’s hard lock-down is looking like a good decision; but the benefit will be squandered away if COVID-19 cases mount rapidly. Even more damaging will be the failure to deal with the economic aftermath. We are already lagging far behind most nations in the steps taken to mitigate economic hardship. The measures announced so far are paltry and most are just about to kick in, in April. 
Although Indians are fully with the government in fighting the virus, there isn’t enough sensitivity about the fact that the poor, who are the largest section of the population, are suffering the most.
Our lop-sided response is probably because our decision-makers, as privileged government employees, are taken care of. In fact, the Cabinet cleared a 4% hike in dearness allowance for them as late as on 18th March.
The only government employees exposed to COVID-19 hardship are providers of essential services, municipal workers, healthcare workers, police, fire brigade and civil defence personnel, bankers and those with utilities companies. 
Almost everybody else is grappling with job losses, deep pay-cuts, loss of income and livelihoods and inability to pay back loans and credit card dues. The prospects for MSMEs (micro, small and medium enterprises) look bleak in the face of a looming economic recession. Most businesses will take some knock, while the clock keeps ticking on mandatory expenses such as office rentals, services and wage bills. 
Acuité Ratings and Research has estimated that the 21-day lockdown will result in a loss of GDP (gross domestic product) of almost US$ 98 billion (equivalent) to the Indian economy, with transport, hotels, restaurants and real estate taking the brunt of the impact. In this context, let us examine a few decisions over the past week, in India and abroad. 
Moratorium: Last Friday, the Reserve Bank of India (RBI) announced a three-month moratorium on payment of interest and assured that credit records will not be impacted by the delayed payment and companies that avail of the leeway will not be declared defaulters. In a country with low financial literacy, this concession, although positive, is a pittance and has only unleashed worrying confusion among individual borrowers. 
Questions on social media indicate that people believe they have an interest waiver or subvention. That is not true. This is worrying for those with credit card dues and loans that will compound at a very high rate and, eventually, lead to a default. Mortgage borrowers would find their repayment period extended significantly. The saving grace is that the moratorium is not automatic; so most people weigh their options before selecting it. 
Selective Benevolence: Taking advantage of the COVID-19 lockdown, the government slashed the interest paid on small savings such as public provident fund (PPF), kisan vikas patra (KVP) and national savings certificates (NSC) by 70bps-140bps (basis points). Banks have also been cutting interest on terms deposits. This is especially hard on senior citizens who live on interest income and have been hit by the failure of cooperative banks and non-banking finance companies in the past couple of years. 
Now, contrast the treatment of ordinary savers with the government’s benevolence to toll collection agencies on our national highways. The ministry of road transport & highways (MoRTH) asked the National Highways Authority of India (NHAI) to suspend toll collections across the country till 14 April 2020 due to the 21-day lock-down period. 
Most of us saw this as a move to save the country some money. It required the intrepid journalist and activist, Pravin Wategaonkar, to point out that this notification, in fact, protects toll companies and allows them to seek compensation that will run into hundreds of crores of rupees. 
In a letter to the prime minister (PM), Mr Wategoankar says, “Due to the lock-down there is there is no regular traffic on road. Even on toll booths, there is almost no, or very less, waiting period for paying toll. In addition, ambulances that are out on the road are already exempted from the tolls. In the absence of regular traffic, if toll is suspended, then the contractors get a right to claim compensation for the losses. This at a time, when other businesses are absorbing losses and the government's move will allow contactors to earn money. This is violation of Article 14 read with Article 19(1)."
That toll operators will seek compensation is not mere conjecture. The Maharashtra government had proposed to pay Rs145 crore for the 24 days suspension of toll during the demonetisation period; multiply that by toll collection nationally and understand the extent of the give-away. 
At a time when businesses are suffering crippling losses and the PM is urging small employers to keep paying salaries without any compensation or tax-break, why this special dispensation for toll-operators who continue to collect tolls primarily in cash?
Tax Opportunism: On the very day that PM Modi announced the 21-day lock-down, our finance minister obtained an authorisation for a future hike of Rs8 each in excise duty on petrol and diesel as Parliament passed the Finance Bill, 2020. We are fortunate that oil prices have crashed and the government is saving plenty of foreign exchange.
We have been spared a duty hike on oil prices so far; but there will be no respite from tax harassment, whether or not businesses survive the present crisis. Just as people were feeling relieved at the tax deadline being shifted by three months came media reports that the central board of direct taxes wanted its officers to chase ‘large taxpayers’ on telephone or email from home, to follow up on dues and file daily reports. 
The Income-tax Officers Association has objected to this order and asked for ‘a humane approach’ at a time when the country was battling a pandemic. This ‘humane approach’ is not for the large taxpayers whose businesses have taken an irreparable beating; they argue that it is ‘inhuman’ for tax officers to chase up tax payments when they are comfortably locked-down at home without having to worry about their own salaries.
Global Action
In contrast, countries around the world are going all out to help mitigate the damage caused by the lock-down or to ensure the burden is shared equitably. Canadian PM Justin Trudeau’s stimulus package included a special deal for small businesses that, he acknowledges, are the backbone of Canada’s economy, just as they are of ours.
While Indian lenders were allowed to slash interest rates on small savings, here’s what the Prudential Regulatory Authority (PRA) of UK did. It forced banks to scrap dividends (£8 billion, estimates The Guardian) and share buyback plans for 2019 and 2020, thus ensuring that they are forced to conserve money during the pandemic. It also made it clear that there will be no ‘cash bonuses to senior staff’ including all ‘material risk-takers’ and sought an unambiguous assurance with regard to the accrual, payment and vesting of variable remuneration. Bank of England has issued a similar warning to insurance companies. 
The manner in which PRA ensured joint action and compliance by all banks is significant. Chief executive officer (CEO) Sam Woods’ letter to banks said, “Please confirm by 20.00 today whether or not your group is ready to agree to this request. The PRA stands ready to consider use of our supervisory powers should your group not agree to take such action.” That is not all; the letter included a draft of the possible statement to be issued by banks, including a ‘draft text of a PRA statement’ that would be issued, depending on the bank’s decision.
Given the terrible performance of India’s banking sector and the Yes Bank debacle, we would have liked to see RBI cracking the whip in a similar manner on banks, whose bad loans are repeatedly paid up by the exchequer in the form of ‘recapitalisation’. This hasn't happened so far.
While the COVID-19 storm was brewing, the Indian government was busy trying to enforce the Citizenship Amendment Act (CAA) and National Population Register (NPR). When COVID became a pandemic, it announced a national lock-down, which turned out to be a decision without adequate preparation. There was no warning, no preparedness. It unleashed panic among the migrant labourers who started a mad rush towards their homes. The lock-down had affected delivery channels, snapping the link between farmers and consumers and leading to massive losses. 
Will the initial blunders teach the government to become more sensitive to people and ensure that the most vulnerable sections of our population are protected and the pain is evenly shared? We aren’t seeing any signs of it, as yet.

4 years ago
According to news reports published on 7 April 2020 , scientists have found a trial drug that effectively blocks the cellular door SARS-CoV.2 uses to infect its hosts . This is expected to provide a potential treatment for the Coronavirus. An European company is likely to test the drug soon. The study , published in the journal Cell , provides news insights into SARS-CoV-2 , the virus that causes COVID-19. In this context , it may be relevant for readers to know this Vedic astrology writer’s predictive opinion. Last year 2019 , during October to December , this writer had covered India , Singapore , Japan , Italy , Canada , Ireland and the U.S.A. for purpose of yearly 2020 predictive alerts , separately for each country. One major predictive alert , common to all the aforesaid countries , had covered the period of about three and a half months from mid-March to June in 2020. It looked to be a period testing ‘ patience’ and ‘ perseverance’ of the people through a variety of major worrisome concerns. In some cases , it was specified to be relating to health woes or health hazards involving digestive system , nervous system , sex , respiratory system in the body and the like. But beyond June , from July to October , in 2020 , this writer had predicted of ‘ change of weather’ or at least a time that could address the woes of the immediate past. So reading in between the lines , it can be said that some effective drug or remedy can arrive by mid or towards last week of June 2020 to provide some relief during July to September , 2020 , to some good extent. But the need to be alert does not come to a stop here. Complacency can have tendency of re-appearance during October- December 2020. So continued vigilance may pay some dividends. One more alert prediction here for exercising more care and appropriate strategy. A period of nearly one and a half month from mid-April to 31 May in 2021 , particularly last eleven days of May 2021 would call for more alertness and appropriate strategy. In the absence of alertness and appropriate strategy , COVID-19 can re-emerge with greater strength and mischief in vulnerable most parts of the world. The planetary impact appears to be prone to suggest another reading covering mid-April to 31 May in the coming year 2021 - full-fledged war somewhere , could even be something most dreaded WW3 besides crisis in economy , trade and food sectors. For more precision as regards countries which may likely get involved, this writer has in mind to go into further details while figuring out yearly predictive alerts for some countries towards September -October 2020 , covering 2021.
4 years ago
This compensation to Toll operators is an eye opener! What fixed cost does this business have - is it only the interest on loans which is also likely to get the benefit of moratorium? If my understanding is correct, it is the last business that needs such support! If they lose a month's toll collection, they can always be allowed to collect toll for an extra month after their contract gets over.
4 years ago
It is HIGH time the governments started listening to rational, logical and free-minded industrialists like Rajiv Bajaj who says: It is TIME to OPEN UP the economy, let the senior citizens stay indoors, and LET the young people power the economy by going on about their lives. You need to save LIVES, but you also need to save LIVELIHOODS. Contrary to what people may think, real courage will be on display when the government starts opening up the economy using clever containment, testing and distancing tactics, and not by just shutting everything off and sitting at home.
4 years ago
There is another class of senior citizens who are living all alone in rented accommodation, and not getting support from their children in these hard days of coronavirus who used to help their parents earlier due to break in the circulation of the money - they (the earning hands in the children) used to get from their employers or from those for whom they have been working on contract basis or the professionals. This break in the cycle of the cash flow has badly affected the senior citizens. On the top of it the landlords have in certain cases point blank refused to forego at least one month rent and be one in the cycle of money flow. In Delhi the landlords have passed on the benefit in the free supply of water and eletricity to the tenants, which has badly affected the senior citizens or the young ones living alone on Paying Guest accommodation.

The RBI, the State Governments and the Central Government (in the Home Ministry, Finance Ministry are humbly requested to please do something for this middle and lower middle class of senior citizens. I shall feel obliged to receive any communication from these authorities through this channel of Moneylife or my mobile Nr 9910338312, or, on my email ID: [email protected].
4 years ago
Without undermining the efforts thus far; for example, Kerala, Tamil Nadu governments have announced relief packages for the MSMEs and Industry in general worthy to follow. We should demand from the Government an exemplary Emergency Relief Package like the one announced by Canada and UK. Excepting the 10% of MSME units producing masks, ventilators and gloves and pharmaceuticals all other units have little turnover to look for and the labor is already at the begging end. This is the time to announce: a special Fund to protect all the existing accounts with Banks and NBFCs and FIs; allow them a state guaranteed -Covid Credit Guarantee: for up to Rs.100lakhs with no collaterals for additional loans to restart; banks, NBFCs to rework on the working capital; offer loans at interest at no more than 9% for all categories as the RBI has since reduced the policy rates substantially; and the moratorium announced should be reviewed and fitted into the new measures.
4 years ago
Surely the banging of plates AND the upcoming lighting of diyas compensates for all of that?!
Meenal Mamdani
Replied to ganeshjohnson comment 4 years ago
I assume that is a satire, because of the exclamation points.
The money spent on this extravaganza would have fed millions of people.
Even though I was not a Modi supporter I wished him well as he seemed focused on economic reforms. I turned a blind eye to his egregious human rights record re minorities believing that if economic prospects for India improved and economic reforms were put in place, at least we would be on the path for a brighter future for India.
I can see now that this was a mirage.
Modi wanted to make India a theocratic Hindu state and to do this he adopted the guise of an economic reformer to bring the neutral voters on board. Now he has the mandate to do as he pleases for 5 years and his true aims are being manifested.
We were hoodwinked.
Replied to ganeshjohnson comment 4 years ago
Reminds me of the old Tortoise coil ad: kachva jalao, machar bhagao.
So now: diya jalao, virus bhagao.

Let's hope the government does much more for the millions of poor Indian families affected by the lockdown ASAP.
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