View: How government and businesses can share India's covid burden

By Akhil Gupta With the Covid-19 nationwide lockdown causing severe constraints and hardships on businesses and livelihoods, among other requests made to the citizenry, GoI has also asked businesses not to terminate the services of employees during this crisis. Most SMEs can comply with this request for, say, a month, but to expect them to sustain ‘unemployed employment’ beyond that would not only be unfair, but also practically impossible. India can only overcome this financial crisis and dodge economic devastation if all four stakeholders —employer, employee or contract worker, government(s) and vendor —make some sacrifices and share the financial burden . For the duration of business lockdown, as well as the next two months (the time by which one could hope some ‘normalcy’ returning), the payables to the employees and contract workers could be dealt in the following manner: *Contribution by government: Half of the balance payable after a salary/rent reduction could be reimbursed by the government as credit against statutory dues payable by the employer, e.g., goods and services tax (GST), income-tax (I-T), professional tax, provident fund (PF), employees’ state insurance (ESI). Effectively, the employer ends up paying a third to 40% of the amounts normally payable to such recipients. At end of two months after the lifting of lockdown, employers could resume normal payments without any deduction. Unless government makes all concerned share the burden, no advisory or directive will practically work. Without doubt, this government subsidy will result in an increase in fiscal deficit. However, in extraordinary times like these, there is no alternative but for government — both central and states — to focus on the survival of the citizenry and put fiscal deficit concerns on the backburner.