Will not allow Abdullahs, Muftis to divide India: Modi

New Delhi, Jun 30: Prime Minister Narendra Modi on Tuesday announced the extension of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), a free ration scheme, for 80 crore people across the country till end of November.

In a televised address to the nation, Modi also said the government was working on a "one nation, one ration card" initiative.

On the extension of the PMGKAY, he said it will cost the government Rs 90,000 crore more.

Under the scheme, five kgs of wheat or rice and one kg of pulses per month will be given free of cost to the poor. The scheme was initially rolled out for three months.

The prime minister also said timely lockdown to contain coronavirus and other decisions saved many lives, but added that since "Unlock 1" has begun, people have shown negligence.

He said in comparison to other countries across the globe, India has done well in dealing with the pandemic.

May 28: Abdul Kareem was forced out of school and into a life of odd jobs like repairing bicycles before he finally managed to pull his family out of abject poverty transporting goods across Delhi in a mini truck.

The job, and the slim financial security that came with it, was the first stepping stone to a better life.

All that is now gone as India reels under the economic impact of its protracted coronavirus lockdown. Mr Kareem's out of a job and stranded in his village in Uttar Pradesh with his wife and two children. Their minuscule savings from his Rs 9,000 a month job have been exhausted, and the money he saved for books and school uniforms is spent.

"I don't know what the job situation will be in Delhi once we go back," Mr Kareem said. "We can't stay hungry so I will do whatever I find."

At least 49 million people across the world are expected to plunge into "extreme poverty" -- those living on less than $1.90 per day -- as a direct result of the pandemic's economic destruction and India leads that projection, with the World Bank estimating some 12 million of its citizens will be pushed to the very margins this year.

Some 122 million Indians were forced out of jobs last month alone, according to estimates from the Center for Monitoring Indian Economy, a private sector think tank. Daily wage workers and those employed by small businesses have taken the worst hit. These include hawkers, roadside vendors, workers employed in the construction industry and many who eke out a living by pushing handcarts and rickshaws.

For Prime Minister Narendra Modi, who came to power in 2014 promising to lift the poorest citizens out of poverty, the fallout from the lockdown brings with it significant political risk. He won an even larger second term majority last year on the strength of his government's popular social programs that directly targeted the poor, such as the provision of cooking gas cylinders, power and public housing. The breadth and depth of this renewed economic pain will only increase the pressure on his government as it works to steer the country's economy back on track.

"Much of the Indian government's efforts to mitigate poverty over the years could be negated in a matter of just a few months," said Ashwajit Singh, managing director of IPE Global, a development sector consultancy that advises several multinational aid agencies. Noting that he did not expect unemployment rates to improve this year, Singh said: "More people could die from hunger than the virus."

Desperate Times

Mr Singh points to a United Nations University study estimating 104 million Indians could fall below the World Bank-determined poverty line of $3.2 a day for lower-middle-income countries. This will take the proportion of people living in poverty from 60% -- or 812 million currently, to 68% or 920 million -- a situation last seen in the country more than a decade ago, he said.

A World Bank report found the country had been making significant progress and was close to losing its status as the country with the most poor citizens. The impact of PM Modi's lockdown risks reversing those gains.

The World Bank and the CMIE estimates were published in late April and early May respectively. Since then the situation has only become grimmer, with harrowing images of people making desperate attempts to reach their villages, on crowded buses, the flatbeds of trucks and even on foot or on bicycles dominating media coverage.

The Rustandy Center for Social Sector Innovation at the University of Chicago Booth School of Business analyzed the unemployment data from the CMIE, collected through surveys covering about 5,800 homes across 27 states in April.

Researchers found rural areas were the hardest hit, and the economic misery was the result of the lockdown, rather than the spread of infections in the hinterland. More than 80% of households had experienced a drop income and many won't survive much longer without aid, they wrote in a report.

The government has promised cheap credit to farmers, direct transfer of money to the poor and eased access to food security programs -- but these help people who have some documentation, which many of the poorest don't. With millions of impoverished people now in transit across the country, the food security situation is dire -- news reports are emerging of people foraging through piles of rotting fruit or eating leaves.

Shattered Economy

The economy was already growing at its slowest pace in over a decade when the virus struck. The lockdown, which came into effect on March 25, has hammered it, stalling business activity and putting a lid on consumption, pushing the economy to what may be its first full-year contraction in more than four decades.

It's dire enough to warrant the country exiting its lockdown, as it has been doing incrementally since May 4, even as its infections are surging. India is now Asia's virus hotspot with infections crossing 151,000 according to data from Johns Hopkins University.

PM Modi, who has come under criticism for the pain inflicted on the poor, has said his government will spend $265 billion or about 10% of its GDP to help Asia's third-largest economy weather the pandemic's fallout. But experts say only a part of it is direct fiscal stimulus, and probably smaller than the total damage done to the economy during the lockdown period.

"What is especially worrying is the government's response," said Reetika Khera, an economics professor at the Indian Institute of Technology in Delhi. "The epidemic will magnify existing -- and already high -- inequalities in India."

Still, the economic measures aren't going to kick in for some time and industry will likely struggle to restart because of the flight of labour from industrial hubs.

And as the harsh summer unfolds more pain lies in store in the villages now dealing with returning migrant workers.

"There are no factories or industries here, there are just hills," said Surendra Hadia Damor, who had walked nearly 100 km from Ahmedabad, Gujarat, before a voluntary organisation drove him to his village in the neighboring state of Rajasthan. "We can survive for a month or two and then try and find a job nearby -- we will see what happens."

From March through May, around 1 crore migrant workers fled India’s megacities, afraid to be unemployed, hungry and far from family during the world’s biggest anti-Covid-19 lockdown.

Now, as Asia’s third-largest economy slowly reopens, the effects of that massive relocation are rippling across the country. Urban industries don’t have enough workers to get back to capacity, and rural states worry that without the flow of remittances from the city, already poor families will be even worse off -- and a bigger strain on state coffers.

Meanwhile, migrant workers aren’t expected to return to the cities as long as the virus is spreading and work is uncertain. States are rolling out stimulus programs, but India’s economy is hurtling for its first contraction in more than 40 years, and without enough jobs, a volatile political climate gets more so.

“This will be a huge economic shock, especially for households of short-term, cyclical migrants, who tend to come from vulnerable, poor and low-caste and tribal backgrounds,” said Varun Aggarwal, a founder of India Migration Now, a research and advocacy group based in Mumbai.

In the first 15 days of India’s lockdown, domestic remittances dropped by 90%, according to Rishi Gupta, chief executive officer of Mumbai-based Fino Paytech Ltd., which operates the country’s biggest payments bank.

By the end of May, remittances were back to around 1750 rupees ($23), about half the pre-Covid average. Gupta’s not sure how soon it’ll fully recover. “Migrants are in no hurry to come back,” Gupta said. “They’re saying that they’re not thinking of going back at all.”

If workers stay in their home states long term, policymakers will have more than remittances to worry about. If consumption falls and the new surplus of labor drives wages down, Agarwal said, “there will also be a second-order shock to the local economy. Overall, not looking good.”

India announced a $277 billion stimulus package in May and followed it up with a $7 billion program aimed at creating jobs for 125 days for migrants in villages across 116 districts. Separately, local authorities are also looking for solutions.

Officials in Bihar have identified 2,500 acres of land that could be made available to investors, said Sushil Modi, deputy chief minister of Bihar, a state in east India. “We can use this crisis as an opportunity to speed up reforms,” he said.

The investors haven’t materialised yet, and in the meanwhile, state governments are relying on the national cash-for-work program that guarantees 100 days worth of wages per household.

Skilled workers don’t want to do manual labor offered through the program, and even if they did, says Amitabh Kundu of RIS, many think of it as beneath their station. “There will be an increase in social tensions,” he predicts. “Caste may again start playing a role. It’s absolute chaos.”

For skilled workers, initiatives vary:

* Uttar Pradesh, which received 3.2 million people, is compiling lists of skilled workers who need employment and trying to place them with local manufacturing and real estate industry associations. So far, the government says, it’s placed 300,000 people with construction and real estate firms.

* Bihar has placed returners in state-run infrastructure projects and hired others to stitch uniforms and make furniture for government-run schools, even as they waited in quarantine centres, said Pratyay Amrit, head of the state’s disaster management department.

* The eastern state of Odisha announced an urban wage employment program aimed at putting as many as 450,000 day labourers to work through September. Some 25,000 people have been employed, so far, under the scheme, G. Mathivathanan, principal secretary for housing and urban development said.

Attracting Investments

It’s not clear any of this will be enough to make a dent, says Ravi Srivastava, professor at New Delhi-based Institute of Human Development, adding that the states don’t have much of a track record on economic development.

“It was the failure of these states to improve governance and put development plans in place that led to the out-migration in the first place,” he said.

But officials and workers’ rights advocates see opportunity. Uttar Pradesh has established liaisons to encourage companies from the US, Japan and South Korea to establish manufacturing in the state. There and in Madhya Pradesh and Rajasthan, the government has made labour laws more friendly to employers, making it easier to hire and fire workers.

Modi, the minister from Bihar, said the migration may also give workers--historically a disenfranchised group--new power, particularly as urban centres struggle. “The way industries treated workers during the lockdown -- didn’t pay them, the living conditions were poor -- now these industries will realize the value of this force,” Modi said.

“In the days to come, labour will emerge as a force that can’t be ignored anymore,” he added. “That’s the new normal. We will work out how to ensure dignity, rights to our people who are going to work in other states.”

Bihar is due for elections by November, a vote that could be an early test of the mass migration’s political consequences. The state is currently governed by a coalition that includes Prime Minister Narendra Modi’s Bharatiya Janata Party. Amitabh Kundu, a fellow at the Research and Information System for Developing Countries, a New Delhi-based government think-tank, said migrant workers are likely to be angry voters.

“Chief ministers are telling these migrants that they will not have to go back for work,” he said. “But their capacity to do something miraculous in the next four to five months is doubtful. If they can retain even one-fourth of the migrants, I would call it a success.”