Events & Issues

New Delhi, 20 February 2019

Minimum Guaranteed Income

WILL PLEDGE BECOME REALITY?

By Dhurjati Mukherjee

‘Minimum guaranteed income’ appears to be the new buzz word this election season. State governments and the ruling elite seek to woo the poor by committing themselves towards achieving this aim. But will it become a reality and change lives?

Recently, Sikkim launched a scheme to distribute income through contractual jobs, while Telengana and Odisha have come up with innovative income schemes for farmers. Congress President Rahul Gandhi too stated at a recent famers’ rally: “the poor will get minimum income directly in their bank accounts. The scheme will be first of its kind in the world as no other country has come up with such a decision so far.”

Further, he claimed that if elected to power, “nobody will remain hungry and nobody will remain poor as all poor people will be entitled to a guaranteed income”. It is understood that this would work out to 1.5 per cent of GDP and the Congress manifesto would carry details of the plan.  

What is the ground reality today? India, it is reported may have reduced poverty. However, the last official data is over eight years old. In 2011, 268 million were surviving on less than $1.90 a day, the World Bank measure for extreme poverty. The next round of data, which is expected to capture household consumption more comprehensively, may not be out before June this year, much past the polls.

Recall, it was former Chief Economic Adviser Dr Arvind Subramanian, who had first floated the idea of a universal basic income (UBI) scheme in the Economic Survey for 2016-17. The poverty line was calculated above Rs 893 per month in 2011-12, which according to him, comes at Rs 5400 per annum. Further, he stated “the number is scaled up for inflation between 2011-12 and 2016-17. And this yields Rs 7620 per year for 2016-17.  

In fact, he proposed a quasi universal basic rural income (QUBRI) of Rs 18,000 a year to each rural household, except those that are demonstrably well-off at an estimated cost of Rs 2.64 lakh crore to tackle the agrarian distress.

In the detailed paper titled Quasi Universal Basic Rural Income (QUBRI), which Subramanian had co-authored with Director, JH Consulting, Josh Felman, World Bank, Bobin Paul and Harvard University Ph.D student M R Sharan, it was stated the burden should be shared by both the Central and State governments. Since then, there has been a lot of discussion and debate among a section of economists about the need to ensure direct transfer of resources to enable them minimum income and better living conditions. These include Prof. Pranab Bardhan of University of Berkeley, Prof. Vijay Joshi of Oxford University and Prof. Abhijit Banerjere of MIT. 

However, as is known there are different estimates of poverty and economists generally believe that 18 to 20 per cent or one fifth of the population are below that line. Suresh Tendulakar Committee calculated it on the basis of NSS 2011-12 consumption data, estimated at Rs 27 a day in rural areas and Rs 33 in urban areas. However, it needs to be noted there is a huge segment of the population, which may be above the poverty line and may fall among the economically weaker section (EWS), which is in great distress due to a stagnating rural scenario.

Interestingly, while President Ram Nath Kovind recently painted a rosy picture of rapid development by stating: “India is at the doorstep of eliminating extreme poverty for the first time in memory”, an analysis of the recently-released ‘Oxfam Inequality Report’ makes it quite clear that while statistically it can be proved that number of poor is declining, their social and economic conditions are no less better! This is demonstrated by the Report’s finding that wealth of top 1 per cent increased by 39 per cent, whereas wealth of bottom 50 per cent increased by a dismal 3 per cent.

Further, the fact that India has been ranked at the 103rd position among 119 countries on the Global Hunger Index with “serious levels of hunger” also shows that this is not in tune with the President’s observation.

While many a step is being contemplated, not all would be in the right direction. The poor and the deprived need not just a minimum guaranteed income but also basic health and education facilities at the village or at least the block level. This has not been given the attention deserved over the years, mainly due to wrong policies in favour of the rich and the middle income sections of society, who actually wield power and authority.

In addition there are fresh reports of inadequate funds for the MGNREGA programme, which is indeed confusing as it has shown ‘successful’ employment generation of approximately 12 crore active workers. However, statistics reveal that the number of people who had completed 100 days of work fell from 25 lakh in 2008-09 to a measly one-tenth of that number with only 2.2 lakh people completing 100 days in 2017-18. Meanwhile, as per present reports, States like West Bengal, Kerala, Karnataka, Maharashtra and Tripura have not been able to pay their labourers for months. Doesn’t this indicate lack of sincerity of governments to ensure minimum income to the poor?

It is vital to understand the widening inequality in the country from the perspective of socio-economic relations in a society. The reason for so much violence and anti-social activities is the direct fall-out of deprivation and neglect of a major section of society, which does not like the politician-businessmen nexus to amass power and wealth. Sociologists predict, and quite rightly, that the form of dissent may take a more violent turn if the disparity is not narrowed down or the basic necessities of life provided to the poor and the EWS groups.   

Questions may arise about how to finance the programme of guaranteed minimum income. According to experts, the funding mechanism can be arranged from various ways-- the most important being eliminate corporate tax holidays and exemptions. Other measures may be like rolling back subsidies going to the non-poor, rolling back non-merit subsidies, removing a few dysfunctional social welfare schemes or raising additional taxes. Thus, funding this programme should not be a mega problem as it would at the end improve the conditions of the poor. Another vital fall-out could be the impetus it would give to financial inclusion as transfers will encourage people to use bank accounts, leading to higher profits for banks.

There is thus a dire need for the Government to seriously consider implementation of ensuring that such minimum income becomes a reality. Those who receive the money may be considered for employment in productive work and according to the type of work being engaged, may be paid more if necessary. This could, if constructively undertaken, help in alleviating poverty and ensuring better livelihood for the neglected sections of society. Mere slogans and commitments would not work.---INFA

(Copyright, India News & Feature Alliance)