Cash in people’s hands would have helped restart the larger economy.
On the morning of 20 September 2019, Finance Minister Nirmala Sitharaman announced a huge cut in corporate tax rates. In a normal situation, such changes are only announced during the budget. Besides, the finance minister presented the budget just a few months back on 5 July 2019. So why the sudden announcement?
It was because Prime Minister Narendra Modi was flying to the US the very same day – a move that he would announce in the US and earn praise.
Big businesses saved Rs 1,45,000 crores with this slash in taxes. These industry behemoths did not pass on the benefit. They did not set up factories or new jobs, they did not increase salaries of the employees, neither did they reduce the price of the goods for the consumers. Hundreds of big businesses were benefited and decided to keep the money for themselves.
Four months after the announcement of tax reductions, coronavirus gripped the world. In March, PM Modi ordered a sudden total lockdown in the entire nation to contain the spread of coronavirus.
But while daily life came to a standstill with the lockdown, COVID cases continued to climb. Today, millions of people are without a job and no income. Around 6 crore small business have been shut.
How does one restart their life and open up the economy?
The first thing that the government should have done is put money in the hands of people. A minimum of Rs 7,500 per family for the 13 crore families in the bottom half of India’s population.
It would have given them security and confidence to survive in these uncertain times. Giving money to people would have helped restart the larger economy. Every family would use this Rs 7,500 slowly for 2-3 months. Shops would gradually open and people would use this money to make basic purchases.
This would help kick-start the economy and create jobs, thereby boosting the economy.
This would have cost the government less than Rs 1 lakh crores, which is less than the overall money it decided to forego by giving big businesses corporate tax relief which did not trickle down to the people.
Every country in the world gave direct cash assistance to the people in difficult times. Why is the Modi government not willing to help our citizens?