Kerala CM criticizes center’s COVID-19 package

Pinarayi Vijayan

Kerala Chief Minister Pinarayi Vijayan today criticized the economic support package announced by the central government to deal with the fallout of the COVID-19 pandemic in the country.

Vijayan’s biggest grouse was that out of the Rs 20 lakh cr (Rs 2 trillion) included in the package, only about 5% was allocated for programs that addressed the citizens directly.

The rest, he alleged, was being routed to other players such as banks and private corporations in the hope that it may have some impact on the citizens in the longer run.

“According to experts, less than 1 lakh crore out of the 20 lakh crore will reach the man on the street. This is especially inadequate when you consider that corporations have been allowed Rs 1.5 lakh cr just in the form of tax breaks,” he said, citing ‘experts in the field’.

He was also critical of the move to allow private corporations into areas that were hitherto reserved for government companies and organizations.

“They have announced many moves such as privatization of government companies as part of the package. These have nothing to do with COVID-19.

“What was required was a package to address the public health crisis [borne out of the COVID-19 infection]. But that did not materialize,” he said, adding that Kerala government will continue to support public sector undertakings in the state.

Vijayan also took the center to task for imposing conditions before allowing states to borrow more money from the market. The center had relaxed the fiscal deficit target for the year from 3.5% to 5.5% of the GDP.

“The center has decided to borrow up to 5.5% of the national income [up from 3.5% target]. Preventing states from also doing so and imposing various conditions before them is not in the spirit of federalism, especially since the finance minister herself has admitted that it is the states that have to fight on the frontlines against COVID-19,” he said.

International financial services provider Barclays had analyzed the various measured announced by the center under the COVID-19 package, and came to the conclusion that the actual fiscal impact of the measures on the budget would be only Rs 1.5 lakh cr and not Rs 20 lakh cr.