Centre should formulate scheme to compensate unorganised sector workers during COVID19, reimburse losses incurred by states: Plea in SC

A plea has been filed in the Supreme Court seeking a direction to the Centre to formulate a scheme for compensation for the losses incurred by workers of the unorganised sector as a result of the Coronavirus lockdown..The plea filed by Advocate R Subhramanian also states that after the scheme is formulated, the government should implement it through the states and union territories. The petitioner has also sought a direction to the Centre to "compensate all States and Union Territories 100% of the loss suffered by the States in their revenues due to lock down".It is stated that Fiscal Responsibility and Budget Management Act (FRBM) restricts excess spending by the Union over its expenditure. Section 4(2) of the FRBM allows exceptions in case of national calamities, and Section 4(3) limits the waiver in this regard.The plea states that due to the unprecedented lockdown, the unorganised sector has suffered huge losses. Thus, the Court should suspend the operation of Section 4(3) of FRBM Act “at least for Fiscal year 2020-21 to enable the Union to do its duty to support the states with necessary funds and not be constrained by FRBM limits.”Making a case for the suspension of the FRBM Act, the plea states that revenue sources of states have collapsed in view of the lockdown, as even the sin tax revenue from tobacco and liquor are not available.."The borrowing costs of state governments in the April 2020 (first week) bond auctions were in the range of 7.8%-8.3% pa significantly higher than that of the Union’s borrowing cost of around 6.5% pa reflecting concern about the State’s fiscal position and also making it costlier to make States rely on borrowing. It is impractical for the State Governments to be expected to finance the loss of income of the unorganised labor or self employed in the informal sector as they have themselves lost revenues due to the cessation of almost all economic activity due to lock down. The Union as the ultimate sovereign is in the best position and is also obliged to ensure that states are compensated for both the contraction in their incomes and also for their additional expenses related to the Covid- I 19 pandemic."Plea filed in Supreme Court.The petition suggests that the Union consult the states and union territories so that a scheme of reimbursement, in whole or substantial part, “excluding those in creamy layer”, and including those whose vocations and incomes have been impaired by the effect of national lockdown, be formulated.Elaborating on the segment suffering due to the lockdown, the plea notes,“some of them are wage earners such as construction workers many are persons who are self employed such as auto drivers and railway porters and coolies and delivery persons working for e commerce companies or drivers engaged by Ola and Uber and free lance electricians and plumbers or even rag pickers.”.“Even small road side businesses such as puncture shops and small electrical and electronic repair shops that populate every part of the country are in the same category. There are thus innumerable people who are dependent on daily work for earning with no concept of leave or pay when not working."Plea filed in Supreme Court.It is further stated that government notifications mandating that salaries and wages should not be withheld for periods of absence due to lockdown is enough evidence to show that even the Union is aware that loss of income should not be forced on the persons denied right to work during the lockdown..[READ THE PETITION]