Ask for it- Price Freeze and Financial Emergency

Governments can help you feel good and reassured through rhetoric. The harsh fact, however, is that retail prices of many basic goods including food products, beverages and appliances are on a rise amid an unprecedented economic crisis. Consider this- big producers can pledge huge money to government relief funds, however, can they justify raising exorbitantly the MRPs of their goods?

Don’t forget India is still a developing country, no matter how greatly politicians project. A large section of population remains poor and the middle class is fragile. Pandemic and bad governance have dealt a severe blow to financial growth and majority of companies have resorted to pay cuts and layoffs. The only truth amid all the glorification and chest-beating by politicians is that incomes have come down and prices are rising. Stagflation is what this is termed in the financial world.

Price Freeze- a policy action by which the government prohibits and penalizes any increase in prices of goods during the period of disaster- is the only way out. Yes, prices that prevailed in the beginning of March 2020 have to be declared, by law, the upper limit for at least next few months. Any price increase for specified goods has to be declared illegal with immediate effect and all recent hikes must be recalled immediately. Products must include all foods and foodstuffs, all clothing, light bulbs, appliances used in preparation of food, basic electronic goods and basic tools.

Critics can argue that price freeze can have a detrimental impact on the economy in the long-run. Let’s not get into that argument since this price freeze has to be for a limited term. Moreover, most companies have yet to cut salaries of top executives and once done, it will bring down costs for them. Believe it or not, producers and traders are profiting at the expense of consumers and governments are mute spectators.

Second, ask for proclamation of financial emergency. Do you think it is justified to charge you the usual tariff for electricity when your income has dropped? Government companies, public sector units, public sector banks and other similar establishments haven’t cut down on their operational costs of which salaries and perks are a major chunk. Is it justified for the state power company to charge high tariff from consumers to fund salaries of their staffers when consumer community is experiencing financial crunch? No. Ask for proclamation of financial emergency that must compel governments to reduce their revenue expenses and transfer some relief to ordinary people.

Price freeze and financial emergency, however tough-to-implement they may sound, are policy actions that can help the common man find at least some relief amid a severely harsh time. A well-intentioned and well-managed scheme can make these two things work. Ask your government for these measures.

proclamation of financial emergency – the only way out of this nationwide crisis

let’s talk real. majority of citizens are struggling with their finances. factories, offices, shops are shut. since there is no way for anybody, save those employed with various governments and government bodies, to make money, the onus lies on governments to provide relief. agreed, a few big corporates will pay salaries during the lockdown period from their reserves and some bosses driven by ethics and morality will also do so.

but india is a big, big country. nearly 90 percent of total workforce is employed in the informal sector and most of the employers will find it impossible to pay their workers due to nil cash flows and unavailability of reserves earmarked for such situations.

amid all this, the governments are charging for electricity and other supplies. they are doing so since the employees of the state and state-owned enterprises will be paid their salaries in full. but is this justified? at a time when companies are laying off workers and not paying salaries due to exigencies that are beyond the control of employers, how can the state pay its employees in full? how can state-owned enterprises, from public sector undertakings to public sector banks to institutes and bodies under various ministries pay their employees in full?

and if they are doing so, this is against the principles of equity. moreover, the state doesn’t earn from commercial activities. a bulk of its revenues comes from taxes and other levies. even the poorest of poor contributes to the exchequer by paying indirect taxes when a bucket or biscuit is bought. it is this money that is used to pay the state staff.

let’s talk about public sector banks. although they undertake commercial activity, we know they rarely do so in the best way. this is the reason they are supported regularly from budgetary resources to save them from sinking. institutes, bodies and associations under various governments and ministries too are funded from budgetary resources.

now when the very foundation of the budget, the taxpayer, is under severe stress, is the state justified in paying its employees in full? although a handful of state governments have declared some cuts in such expenditures, they aren’t enough to tackle the crisis. the only answer is the government proclaiming financial emergency by using powers under article 360 of the indian constitution. after all, the provision has been added to tackle emergencies and the current crisis is deserving of such action since what is happening is unprecedented.

article 360 gives power to the state to issue direction and “any such direction may include a provision requiring the reduction of salaries and allowances of all or any class of persons serving in connection with the affairs of a state.”

nation’s resources belong to every citizen, rich or poor. and hence, equity must be brought without any delay.