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BW Businessworld

The Total Stimulus Package By The GOI Is Just 0.7% Of The GDP Against 12% To 20% Of Other Countries: Kerala Chief Minister Pinarayi Vijayan

BW Businessworld’s Manish Kumar Jha in a special edition on States' measures & economic policies for Covid-19, spoke with Kerala Chief Minister Pinarayi Vijayan over the phone. That fact that Kerala boosts of India’s finest public healthcare system & emerges the best state as per Health Index Report, prepared it to respond to pandemic proactively. Along, the critical steps like early health advisory and measures for welfare funds set out a positive message by Kerala’s leadership and to other states to emulate its model of health care & governance. But state has precarious fiscal deficit which is now targeted at Rs 29,295 crore (3% of GSDP) for 2020-21. CM tells all.

Photo Credit : BW

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Kerala’s deft handling of COVID-19 is placing it as a model state with greater health infrastructure. While Kerala has recorded 485 positive cases so far, 123 are active patients. What is your outlook?

While it is true that we have been able to reduce the number of positive cases and increase the rate of recovery, it is too early to say that we are out of the danger zone. Till those who are undergoing treatment are fully cured and those under observation complete their quarantine period, we cannot throw caution to the wind. Therefore, we are remaining as vigilant as ever. State Government and the civil society are jointly engaged in keeping up this vigil.

As you have been engaging on issues and leading from the front since the outbreak of COVID-19, could you talk about your experience and suggestions that may broaden the collective response for other States in this fight?

We need to realise that COVID-19 cannot be overcome comprehensively without the peoples' wholehearted support. To ensure that, we assured them well in advance that their needs would be taken care of and that they would be provided for, even while they would have to stay at home without work or income. 

The Government of Kerala has implemented programmes like providing free food grains of 15 kg for a month, distribution of welfare and social security pensions, supply of kit of essential commodities etc. The Government has also deferred payments for utilities so that penal charges are not effected. We also opened a direct line of communication with the people, so that they are updated on a daily basis on the challenges we are facing and the interventions that are being made to overcome these. 

To tackle the infective disease, health care interventions alone will not suffice. Apart from providing specialised treatment through the public health care system, initiatives like provision for safe quarantine, preparing a route map for tracing contacts to prevent the spread of Covid-19, are being taken. The entire State machinery and the society are working in unison. Inter-departmental coordination and cooperation required to provide relief to the people under lock down are being ensured by holding discussions with senior level officers on a real time basis. Along with the countries of the world and rest of States in India, Kerala is also facing an unprecedented challenge and we too are gathering experience from our efforts. 

We need to conduct testing of samples on a large scale among the population so that the extent of the spread of the virus can be ascertained with more precision. As of today, India has reported more than 30,000 positive cases. At this point of time, we need to focus on testing and tracing. For this, the availability of the necessary ingredients has to be ensured.  In our opinion the focus should be on ensuring the availability of adequate quantity of testing ingredients so that we can gauge the danger more accurately and take appropriate remedial measures.   


Kerala is expecting another wave because of migrants – estimated at half a million – returning home from the Gulf. Does it pose a big challenge? What are the measures on your mind?

Some of our pravasi (Emigrant) sisters and brothers from around the world are keen to return to Kerala, and we are gearing up to receive them. A help desk is already functioning in NORKA Department and we have set up an online registration process for pravasis wishing to return home, through its website. More than 3,32,000 pravasis from 180 countries have registered till now. 

The Public Works Department has identified around 2,50,000 beds for quarantining and isolation. Over 49,000 beds in Government hospitals have been prepared for COVID-19 patients and over 81,000 beds are available in private hospitals. Around 7,400 ICU beds and 2,400 ventilators are also ready in hospitals across the State. We are making preparation to meet the emergency situation. 

We have requested the Centre to facilitate the return of pravasis on flights chartered especially for this purpose. Extensive preparations are being made in all the 4 Airports in the State to facilitate screening of pravasis on their return. Adequate quarantining facilities are being prepared near the airports itself. Symptomatic returnees will be moved to COVID-19 hospitals as required. Home quarantine of 14 days will be mandated for all those who come in to the State. 

The State Government has already announced monetary assistance to the pravasis in this regard. The Government of Kerala has taken up the issues of returning people with the Central Government stating that certain categories of people should be accorded priority for return journey. As some of them do not have the means to pay for the travel, we have requested to the Government of India to facilitate the same.  

We have requested the Centre to utilise Indian Community Welfare Fund to provide assistance to the returning migrants. A special package is required to rehabilitate them as well. 

Kerala already has a stressed fiscal deficit and COVID-19 is aggravating it further, due to the lock down. What is the expectation from the Union Government?

In the post lockdown scenario, hardly any revenue is being generated. At the same time, States are having to undertake large scale welfare measures to provide for the people as well. We are in a very peculiar situation where there is little income, and the expenditure is rising exponentially. Without additional borrowing, the present needs cannot be met. 

Ever since the Fiscal Responsibility Acts (FRA) have been implemented, the States have been required to adhere to its norms strictly. The limit of borrowing prescribed under the FRA Acts needs to be enhanced to 5 per cent. Government of India has also been requested to enable the States to float Pandemic Relief Bonds at cheaper rates of interest, to take up with the Reserve Bank of India, the demands to enhance Ways and Means limit by hundred per cent. The donations  made by the Corporates to the Chief Ministers' Distress Relief Funds should also be reckoned as expenditure under Corporate Social Responsibility (CSR). 


What is your suggestion for the economic package for COVID-19? What is the way to address the plight of India’s MSMEs and more than 11 crore workers affected?

The total stimulus package announced by the Government of India till now is just 0.7 per cent of the GDP. However, many countries have announced financial stimulus packages ranging between 12 per cent to 20 per cent of their GDP. In some of those packages, there are special schemes for protecting jobs in the private sector through employment subsidies to the job providers. India should also have a comprehensive strategy to tackle the economic hardships that have come up in the light of the pandemic. 

Daily wage labourers, small traders and MSMEs have been hit the worst. A national income assistance scheme should be announced for unorganised and daily wage labourers. Small traders could be assisted through a special package, utilising the NDRF. MSMEs should be allowed immediate loans ranging from Rs.2 to Rs.5 lakhs. The Centre should bear its interest component. Kerala has already announced such a loan scheme through Kudumbashree, with interest payments borne  by the State Government as part of its COVID-19 economic package. 

Besides, doing our best, the Government of Kerala has requested the Central Government to allow an   interest subvention of 50 per cent on all existing loans to MSMEs. We have also taken a stand that measures for providing subsidies to protect existing employment in industries in the present situation should be initiated in our country also. Policy interventions for ensuring wages from Employees State Insurance Corporation (ESI) funds  to workers in enterprises which are unable to function in the current scenario have also been requested.


Amidst the crisis, there are opportunities for attracting global investors – fleeing China – to set up their economic activity in India. How do you look at such possibilities and investment in Kerala and being part of the greater growth story? Any policy incentive on such economic opportunity?

Even as the rest of the country was reeling under a slowdown, Kerala had bucked the trend by registering a 7.5 per cent growth in 2018-19, up from 7.3 per cent in 2017-18. The state’s per capita income in FY 19 was Rs.1,48,078 when compared to the national average of Rs.93,655. The manufacturing sector registered 11.2 per cent growth in the same period, in comparison to the 3.7 per cent recorded in the previous year. A total of 13,826 MSME units started operations with a total investment of Rs.1,321.94 crore. I mention these figures to point to the fact that Kerala has been extremely investment friendly over the last couple of years. 

By enacting the Kerala Investment Promotion Act, we have significantly eased several complicated procedures pertaining to setting up businesses. We have launched an online mechanism to grant clearance for proposals within 30 days of application, K-SWIFT. If the deadline for permission expires without response from authorities, the same is assumed as given and the applicant becomes eligible for Deemed License.

 Entrepreneurs can start micro, small and medium industries having an investment of up to Rs.10 crore without waiting for issue of license from Government Department. Investment Facilitation Centres are operational at the district and state level to guide investors, and we have formulated a policy to develop Startup Eco Systems in the State as well. 

We have been doing exceptionally well in the services sector, particularly in hospitality and IT. They will continue to remain our strength in the future too. With an abundance of skilled resource Kerala has been attracting leading companies from around the world. Even in the backdrop of the current pandemic, we have announced several measures to provide relief to the IT industries in the State.

Rent has been waived or a moratorium has been granted on payment of rent for the months of April, May and June, depending on the area under lease, for companies based in the State’s IT Parks. Surcharge on rent has been waived for 6 months, from April to September. Annual rent escalation of 5 per cent has been avoided for FY 2020-21, in Government owned buildings within IT Parks. Subsidies have been announced in electricity tariffs on IT Parks as well. Additional time of six months has been granted for commencement and completion of construction works in land under the IT Parks, over and above the deadline as per agreement.

We hope to tide over the crisis based on our strength that emanates from our people.