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Guaranteed Minimum Income - A Must-Do or Just A Jumla?

Mala Jay

The dramatic announcement by Rahul Gandhi that if elected to power his party would ensure a Guaranteed Minimum Income for the poor has evoked a tsunami of angry reactions and a flood of cynical comments. 

The BJP is furious. They are accusing Rahul Gandhi of trying to steal Modi’s thunder with an election promise that can never be implemented.  

Establishment economists are aghast - where will the money come from, who are the target beneficiaries, why has he not spelt out the details of the scheme, how does he intend to ensure delivery?

Political pundits are frantically looking for nasty things to say – he does not understand the ABC of electoral politics and welfare economics, he has not even consulted anyone in his own party, he is just indulging in irresponsible competitive populism. 

The real reason for the outburst of anger and outpouring of condemnation is that although everybody knows it is a laudable proposal and the time has come to consider it seriously,  it is unpalatable for anyone remotely linked to the outgoing government that an Opposition leader has been fleet-footed enough to claim the political IPR for the idea.  In other words, the avalanche of criticism stems from jealousy more than anything else.    

Another factor, however, is the tunnel vision of the privileged elite.  For far too long, policy-makers as well as the rich and powerful have been hiding behind the excuse that giving direct benefits to the impoverished and needy sections of society will cost too much. 

Willfully ignoring the fact that humungous amounts of money are routinely made available to already wealthy businessmen in the form of bank loans and tax concessions, there is a ferocious reluctance to allocate even a portion of the nation’s wealth to those who cannot afford even one square meal a day.

In his book ‘The Affluent Society’, John Kenneth Galbraith propounded the pitiless thesis that “private affluence will inevitably co-exist with public squalor” and that governments do not have the power to change the equation.  He may have been right about the inexorable laws of modern society, but that does not mean that governments should not make special efforts to make the lives of the poorest of the poor less miserable.  

That is what the Congress president seems to be attempting to do.  A pledge to ensure a minimum income to every citizen is not a crime.   Some critics have been quick to lambast the very concept of a Guaranteed Minimum Income (GMI).   In a country of India’s size where 22 per cent of the population are below the poverty line, they say,  it will require an outlay of 15 lakh crores to hand out a dole of even Rs. 700 per person.   This amounts to four per cent of GDP and considering that total tax revenue is less than five lakh crores, it is utterly utopian to hand out three times that amount. 

The mathematics of poverty cannot be weighed against the arithmetic of public finance.  Similar statistical arguments were raised when the Rural Employment Guarantee scheme was introduced during the UPA regime and the NDA government had initially sought to downgrade the MNREGA project before realizing that it was not only a vital necessity but also eminently affordable.   Similarly, the Midday Meal scheme is another example of a laudable project that has proved its worth, despite the plethora of shortcomings in its implementation. 

In their haste to discredit Rahul Gandhi’s GMI concept, many analysts are attempting to confuse it with the Universal Basic Income (UBI) idea which former economic advisor Arvind Subramaniam wistfully put forward in the Economic Survey of a few years ago.  

However, Arvind’s UBI and Rahul’s GMI are as different in scope and intent as chalk and cheese.   Universal Basic Income involves the entire population, every citizen.  It is both unaffordable and unnecessary – particularly in a country where the filthy rich are becoming richer by the day and an estimated 300 million middle class citizens are living in relative prosperity. 

Guaranteed Minimum Income, on the other hand, is targeted at financially distressed farmers and unemployed youth, many of whom incidentally have been pushed into penury because of satanic schemes of the present government like demonetization and the utter failure to generate job opportunities.    
   
The announcement made by the Congress president at a public rally in Chhattisgarh is undoubtedly little more than a statement of intention.  It certainly is all too brief and is devoid of details of definitions, dimensions and delivery mechanisms.   But that is what such declarations usually are -  the concept will presumably be elaborated in subsequent statements and fleshed out more clearly in the Congress party’s election manifesto.

The GMI concept implies a social welfare provision that guarantees that all citizens or families have an income sufficient to live on, provided they meet certain conditions.  One way to determine who are eligible is to conduct a “means test”.  It can also be linked to a other criteria like availability for the labour market or a willingness to perform community services.

But the bottom line is that the primary goal of a Guaranteed Minimum Income is to reduce hunger and penury among those who live below the poverty belt or on the margins of perilous livelihood.   From that viewpoint, it is churlish and inhumane to lambast and lampoon Rahul Gandhi for floating the idea.  As an election promise, it has all the hallmarks of a legitimate campaign pledge.  

Frontier
Jan 29, 2018


Mala Jay malalaw@gmail.com

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