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PIL in SC seeks direction to Centre to formulate a scheme to provide compensation to persons working in unorganised sector: COVID19

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A petition has been filed in the Supreme Court seeking directions to Centre to formulate a scheme to provide compensation to persons working in unorganised sector for loss of income caused by the lockdown imposed to combat COVID-19.

The petitioner R Subramanian, a practicing Advocate and an IIT, Chennai graduate has further sought a direction to Union of India to “reimburse the state governments/Union Territories both for all expenditure and for all loss of revenue arising from the pandemic of Covid-19 and if necessary for this purpose suspend the operation of the Fiscal Responsibility and Budget Management Act (FRBM) including specifically Sections 4(2) and 4(3) thereof for Financial year 2020-21.”

The petitioner has pointed out that there are large number of persons in the informal sectors whose incomes are directly dependent on daily activity and the lockdown has completely denied all income earning opportunity to such persons leaving them totally income less. Moreover, most of these persons are unlikely to have large savings from which they can meet expenses during such extended periods of lockdown. Hence, the Union and the State have a responsibility to ensure that the economic loss to the persons who cannot afford such loss is mitigated even if not wholly at least partly.

The petitioner has further highlighted that the “notifications that salaries and wages should not be withheld for period of absence due to lockdown evidence that the Union is aware that loss of income should not be forced on the persons denied right to work during the lock- down.”

However, the petitioner says that while the same may be implemented in the organized sector the same can in no manner be enforced for people in the unorganized sector as many do not have concept of owner or employer.

Therefore, the States and the Union Territories are bound to formulate a scheme to compensate the loss of incomes of the economically weaker sections of society engaged in the unorganised sector.

The petitioner has further brought to the Courts notice that the States and Union Territories are faced with extreme strained finances. Therefore “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-19 pandemic including compensation of the nature for which directions are sought in this Petition.”

While Section 4 of the Fiscal Responsibility and Budget Management Act restricts excess of spending by the Union over its expenditure, proviso to Section 4(2) of FRBM allows exceptions in case of national calamity.

The petitioner has submitted that since the lock down has been enforced from a national calamity the Union is bound to be directed to compensate the states both for the loss of incomes due to lockdown and also for the extra expenditure due to Covid-19 including compensation to such economically deprived self-employed and unorganized sector daily wage earners.

-India Legal Bureau

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