USA’s COVID rescue plan & lessons for India

INTERNATIONAL/ ECONOMY

Topic:

• GS-2: Effect of policies and politics of developed and developing countries
• GS-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

USA’s COVID rescue plan & lessons for India

Context: During Joe Biden’s first joint address to the US Congress as President, he outlined a new paradigm for the US developmental pathway.

Key Features of Joes Biden’s Plan

• Blue Collar Job Creation: Biden stated that “Nearly 90% of the infrastructure jobs created in the American Jobs Plan do not require a college degree. 75% don’t require an associate’s degree. The American Jobs Plan is a blue-collar blueprint to build America”
• Strengthen Workers Right: To further boost the bargaining ability of the working class, he called on Congress to pass the Protect the Right to Organize Act, which will support the right to unionise.
• Gender Parity & Increasing Minimum Pay: Biden argued in favour of raising the minimum wages in US and providing equal pay to women. He said “let’s raise the minimum wage to $15. No one working 40 hours a week should live below the poverty line”.
• Access to good education: Here, Biden wants to increase universal public education from 12 to 16 years as well as give increase grants and invest in historical Black colleges and universities, tribal colleges, minority-serving institutions because these institutions don’t have the endowments.
• Quality, affordable child care: The new plan aims to guarantee that low- to middle-income families will pay no more than 7% of their income for high-quality care for children up to the age of 5.
• 12 weeks of medical leave: Paid medical leave makes sure that no one should have to choose between a job and taking care of themselves or their loved one
• Addressing Child Care Poverty: Another element in Biden’s plan puts money directly into the pockets of millions of Americans by expanding tax credits for every child in a family — aimed at helping more than 65 million children and cutting child care poverty in half.
• Affordable Healthcare: Biden proposed to bring down the healthcare premiums and the price of prescription drug. He stated that “Health care should be a right, not a privilege, in America”

Bottom up/Middle out economics instead of “Trickle down” economics: To finance these plans, Biden junked the long-held notion of “trickle down” economics (TDE) that advocated tax cuts for wealthy people. He announced that wealthiest 1 per cent of Americans need to begin to pay their fair share.

So, what is the significance of Biden’s speech for India’s economy?

• Moving away from Neoliberalism: Biden’s strategy — big government spending push as well as focusing on raising revenues from the rich and the business class to rebuild the economy — is in stark contrast to neoliberal approach of minimum government strategy adopted by Union government since 2014.
• Growing Inequality is the problem: The middle class in India was likely down by one-third in 2020 and around 75 million were pushed below the poverty line even as India became the country with the third-most billionaires in the world. Similar type of growing inequality is sought to be addressed by Biden’s strategy of redistribution of wealth by increased governmental intervention.

Connecting the dots:

• Capitalism Vs Socialism Vs Mixed Market Economy