Senior Congress leader and former Union Finance Minister P. Chidambaram on Wednesday noted that ‘extraordinary times require extraordinary solutions’ and suggested that the Centre announce a ₹1 lakh crore package for micro, small and medium enterpises (MSMEs) to be able to pay wages to 11 crore workers and a ‘pay cheque protection programme’ for lower income groups in other private sector businesses.
In an online press conference, Mr Chidambaram also cautioned the Centre against entertaining any notion of imposing a financial emergency [under Article 360 of the Constitution] that would further limit the financial powers of the State governments.
The Union government should prepare an exit strategy for the lockdown, address the problems of migrant workers and provide financial assistance to the States, he stated.
Financial emergency
“I think even to utter those words at this point of time would be inappropriate. I don’t want to use the phrase financial Emergency and I hope we are not pushed into that. If the government acts promptly, wisely and boldly by taking into account the advice of wise economists, we can avoid a financial emergency,” he replied to a query. “We should do everything to avoid a financial emergency because it would mean that whatever little powers are there with the State governments are taken away.”
Making a strong case for the government supporting the 6.3 crore MSMEs, he said: “We urge the Prime Minister to look at the Congress proposal and immediately announce the implementation of two specific recommendations: Rs 1 lakh crore wage protection assistance to help the MSMEs pay wages and salaries for April and Rs 1 lakh crore credit guarantee fund for the MSMEs that will help them to go to the banks and borrow money.”
He added, “For the non-MSMEs, we urge the government to announce a pay cheque protection programme, similar to the one announced in the United States. This is not a legislation but a financial assistance package.”
Mr. Chidambaram estimated that the government would require about Rs 15,000 crore to help protect the pay of one crore people whose annual incomes is less than Rs 3.5 lakhs.
“Time is of the essence. In the absence of a clear signal of assistance from the government during these extremely difficult times, the private sector will be forced to resort to large-scale retrenchments and lay-offs, which will devastate the livelihoods of hundreds of millions of people,” he said. Private firms may be given waiver of employers’ contributions to the employees provident fund (EPF) and the employees state insurance (ESI) for the next three months.
Mr. Chidambaram also strongly argued that the government should borrow for additional spending and not be bogged down by the proposed target of keeping the fiscal deficit to 3.5 per cent of the GDP.
“Extraordinary times require extraordinary remedies, extraordinary solutions. Look back to the 2008 international financial crisis. If the central banks around the world had followed these conventional rules, the economy of the world would have collapsed. They took what are called unconventional measures,” he pointed out.
Mr. Chidambaram welcomed the Centre’s decision to allow stranded workers and students to return to their homes. “This has been a demand of the Congress since mid-April. Buses alone will not be sufficient. It is better to run sanitised trains point-to-point to move the large numbers who desire to migrate back to their home States,” he said.