That is one-thousandth of 1% of India’s GDP. This kind of an expenditure is surely something that the government can afford. Commercial banks are writing off unpaid loans three times as large as `20,000 crore in some insolvency resolution cases. Nor is the notion that such expenditure would be a drain on the government’s resources needed to combat the after-effects of Covid sensible. The amount paid to families of poor breadwinners who succumb to Covid would very much be spent, rather than diverted to a speculative bet on the stock market.
In other words, what one department of the government gives out as compensation, another department of the government can look on as stimulus, whether it wants to call it that or not. Governments step in to prop up spending, when autonomous spending by households collapses. The compensation to families of Covid victims would constitute precisely such spending, with a humanitarian face.
It would make eminent political sense as well for the government to come forward to help out families in times of need. In any case, it is not for the Centre alone to decide whether to pay compensation in times of a national disaster. The states are stakeholders in providing relief.
The government could consult the states in a meeting of the Inter-State Council, or in one of the meetings the prime minister keeps having with chief ministers. A stand on whether to pay compensation for a disaster can become a political disaster or a political boon. It is a political call, not the prerogative of some factotum in the finance ministry grimly determined to conserve finances at all costs.