Pandemic of poverty: India's financial crisis worsens

Mafazah Sharafuddin
May 31, 2021

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As the country suffers the threat of death and disease, financial struggle looms over it. There has been a huge loss for several of the economy. The government has issued aid, however, it is insufficient and neglects the unorganized sector entirely. 

The estimation of the government, standing at Rs 1,250 crore, and is not close to what is needed by the people. Additionally, it does not aid those who don’t come under government schemes, meaning a huge chunk of the unorganized and industrial sector. 

The financial crisis in India due to COVID is a many headed demon. So many different issues have arisen since the start of the pandemic, and the people of India are suffering under the financial burden. 

Sudden shifts

Since the beginning of the pandemic, the word ‘unprecedented’ has been used innumerable times. Problems arrive suddenly, with no warning. People are losing their jobs all at once after years of working in the same place. 

With the magnitude of the death toll, many a times the sole breadwinner of the house passes away. This leaves the family floundering, looking for jobs and trying to keep mouths fed.

People who are newly unemployed and unable to find jobs in the same industry are left confused. They have a skillset that employers are not looking for and eventually, they have to resort to unskilled labor which gives them lower wages. 

Warning signs 

The fact is that the people are suffering. The numbers back it up. There has been a 15 to 20% increase in poverty since the pandemic began. This means more than 23 crore people have slipped below the poverty line. 

Unemployment has increased, too. 1.5 people have been lost their jobs, and those who continue to be employed face lowered salaries. The per capita income of the country has lowered by 16.8% to what it was in January of 2020. 

Within 2020, there was an increase in people partially withdrawing funds from their Employee Provident Fund accounts. While it was 54 lakh people in 2019, 2020 saw 1.27 crore people doing the same. 

According to RBI, there had been an 81.5% increase in that loans against gold jewelry by Scheduled Commercial Banks in March in comparison with the same last year. 

MFIs, MSMEs suffer losses

MFIs (Micro finance Institutions) cater to the poorer sections of Indian society. The lockdowns have has adverse effects on the functioning of NBFCs and MFIs. With the poor already suffering through unemployment and steep hospital bills, this too has caused a bad hit.

Some sectors are faring worse than others. These industries thrive on travel, face to face interactions and consumerism. Retail, MSME, and hospitality are some of them.

The pandemic has resulted in the closure of 15-20% of the MSMEs in India. Large scale supply chains are taking away their customers as they are not able to operate as usual during the pandemic. If the situation continues, there could be a much larger percentage of MSMEs closed during the pandemic. 

Small businesses run into trouble

Small businesses like family run stores are facing trouble getting customers and keeping their shops open. The lockdown hours put a huge dent in the time they can sell to people. Shops that don’t count as ‘essentials’ often cannot open at all. 

Chain supermarkets and other shops are seeing more traffic as these small businesses get neglected. Without their livelihood, the threat of COVID increases as they would not be able to afford the hospital bills and medication.

Sellers over the internet find it difficult to post packages as delivery services do not function everywhere due to COVID. Small businesses are losing customers at a large scale. 

Social workers rise to the occasion

While the situation is dire, social worker and organizations have taken the initiative to help people. All over India, social workers and volunteers are assisting on everything from grocery packages to cremations. 

The workers help with transportation, reservation of beds, intricacies of the Ayushman card, ensuring the patients and the family members staying with them are fed, etc. With the ongoing crisis with the bodies piling up with no one to deal with them, social workers are also burying and cremating bodies. 

Not just this, but they are also helping people who are not infected, but have been affected by the pandemic. Distributing food, rations etc. to those in need is another task they perform. 

However, without proper government aid to the poorer sections of society, there is no saying how bad the situation could get.

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News Network
June 8,2021

Meanwhile, 15 states reported a positivity rate of less than 5 per cent, Luv Aggarwal, Joint Secretary, Health Ministry, said.

Overall recovery has increased to 94.3 per cent (both home isolation and medical infrastructure) and the positivity rate has decreased by 6.3 per cent overall between June 1 and June 7. 

There has been a continued and sharp decline in daily new Covid-19 cases, which is an almost 79 per cent fall in the figure as compared to the peak of May 7.

India reported less than one lakh new coronavirus infections after a gap of 63 days, while the daily positivity rate dropped to 4.62 per cent, according to the Union Health Ministry data updated on Tuesday.

A single day rise of 86,498 cases was registered, the lowest in 66 days, taking the total tally of Covid-19 cases to 2,89,96,473.

The Covid-19 death toll climbed to 3,51,309 with 2,123 daily deaths, the lowest in 47 days, the data updated at 8 am showed.  

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News Network
June 5,2021

Bengaluru, June 5: At least 43 of around 35,000 depositors that are struggling to get their hard-earned money back from the Sri Guru Raghavendra Sahakara Bank Niyamitha (SGRSBN) have passed away in last one and half years. 

In January 2020, the Reserve Bank of India, had invoked Section 35 A of the Banking Regulation Act, 1949 along with Section 56 of the Banking Regulation Act, after a scam worth Rs 1,400 crore had come to light. 

According to official sources, at least 43 depositors died since then without getting their money back. While some of them died due to covid-19, some others due to other reasons. 

The RBI had also imposed a withdrawal limit of Rs 35,000 citing the bank’s bad loans. The ceiling was raised to Rs 1 lakh later.

Satish Karanth, a mechanical engineer and resident of Kathriguppe, lost his 56-yearold wife Savithri Karanth in March due to breathing issues. “The bank assured good interest rates. We trusted the bank as it was run by our community people. We invested Rs 1 crore, including my mother’s Rs 20 lakh. Now, she despairs every day over the lost money and I don’t know how to console her,” he said.

Vijay Gururaj, a Nagarbhavi resident, said his mother Gayathri Gururaja had deposited Rs 6 lakh. “She was dependent on the interest money for her medical expenses. She was not happy to take money from us. After her deposit was stuck, she became depressed. On March 18, while heading to a hospital, she met with a road accident and died. She did not find peace in her death but was worried about losing money,” said Vijay, an accountant.

Online protest

Hit by Covid-19, the depositors have called for an online protest. It will be organised on Facebook Live — https:// www.facebook.com/SGRSBNDepositors/ — at 8pm on June 6.

Harish Venkataramaiah, a depositor leading the protest, said there has been no development in the last one-andhalf-year with regard to the money. 

“Initially, the heads promised to revive the bank but later an administrator was appointed by the Registrar of Cooperative Societies in Karnataka but that was also of no use. People who defaulted on their loans have been roaming free and the poor depositors are paying a heavy price for it,” he rued.

The bank’s case of irregularities was handed over to the Criminal Investigation Department (CID), which is yet to file a chargesheet. A police official said the CID had collected data of the victims but later Covid-19 situation slowed down the probe.

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News Network
June 12,2021

New Delhi, June 12: The GST Council on Saturday decided to cut tax rates on a number of items crucial in the fight against Covid-19. These include essential medicines, oxygen generation equipment, pulse oximeters and diagnostic and testing machine kits.

These GST cuts were recommended by the Group of Ministers (GoM), formed after the last GST Council meet on May 28, to deliberate on possible reductions in Covid-related items.

Briefing reporters, Finance Minister Nirmala Sitharaman said the recommendations of the GoM had been accepted.

According to the Ministry of Finance, the meeting was attended by Anurag Thakur, Minister of State for Finance, along with finance ministers and senior officials of the states and Union Territories.

Here are 10 key points you need to know about the revised rates:

> No tax will be levied on Tocilizumab and Amphotericin B, the medicines used to treat black fungus.

> GST rates on anti-coagulants like heparin as well as Remdesivir -- a drug used for treating Covid-19 -- reduced from 12 per cent to 5 per cent

> Tax on medical-grade oxygen, oxygen concentrators, ventilators, BiPAP machines and high flow nasal cannula (HFNC) devices has been cut from 12 per cent to 5 per cent.

> GST on electric furnaces and temperature-checking equipment brought down to 5 per cent

> GST on ambulances reduced to 12 per cent.

> Tax on Covid testing kits has been brought down to 5 per cent from 12 per cent.

> Pulse oximeters, hand sanitisers to be charged 5 per cent lower tax

> The GST Council decided to retain 5 per cent GST on Covid vaccines.

> The new rates will be valid till September.

> Centre will buy 75 per cent vaccines, as planned, and pay GST too. Additionally, 70 per cent of income from GST will be shared with states.

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