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Millennium Post

Uplifting the poor

Uplifting   the poor

Rahul promised justice to the poor and Jaitley criticised the gesture. That is, of course, classic politics with ensuing arguments and counter-arguments being the order of the day. But, what captivates mass interest is the Indian version of the Universal Basic Income (UBI) which Rahul and company have promised to the 20 per cent of poorest families in India. Policymakers, economists, and whoever who can relate to the pros and cons of this Nyuntam Aay Yojana (NYAY) or Minimum income guarantee scheme are frenzied over Congress' novel announcement framed as "final assault on poverty". While the premise piques curiosity owing to an unprecedented step which has been promised should Congress come to power, the cost, feasibility, scalability, et al, concerns loom large over this ground-breaking idea. Rs 12,000 per month per family to cover nearly 5 crore families and with Jaitley's courtesy, Team Congress is asserting that Rs 3.6 lakh crore will be the outlay from the exchequer in order to fulfil its crucial electoral promise. One of the many apprehensions is the widening of fiscal deficit which revolves around the inquisitiveness as to where will the money for such a grand scheme come from. The current dispensation has estimated this year's fiscal deficit at 3.4 per cent. Rough estimations cite that Congress' NYAY will be three times India's fiscal deficit and six times its Defence budget. Rahul's claim that calculations have been done and fiscal repercussions have been analysed to arrive at a conclusion that such a poverty-exclusive scheme is feasible. It means that NYAY would not affect India's fiscal deficit but the massive outlay, then, must be aptly accommodated to not have any impact on the fiscal deficit. There are only two ways to do that – increase revenues or cut expenditure – and Congress went silent on that, for now. If Congress decides to cut expenditure then which sector would suffer a cut-down and their "expenditure-rationalisation" call requires explicit elaboration. Should the revenue be increased, Congress would require to increase taxes for the top income group in which case we may see inheritance and wealth taxes be implemented. The other way is to strictly provide subsidies to the poor and let the rich pay the market amount. This will neutralise the budget.

Having accepted Rahul's assertion that this scheme is feasible, the second apprehension circles around identification of the beneficiary. Poorest 20 per cent sounds ambiguous. Moreover, this bracket is below the controversial poverty line, and hence ignores all those who are above its ambit but still below the poverty line. And, not just those but families that are barely above the line and still fall in need of government for economic support schemes. Income data surveys will be needed and extensive identification process will be required to be undertaken to resolve this and the biggest problem that stands tall like a wall to this identification process is the fact that maximum Indians are involved in the informal sector where the income meanders every day. Peculiarities surround NYAY and only discussions will reveal the actual picture. On the other hand, Congress could have tried employment guarantee scheme again – reinvigorating their previous efforts. Surging new life in MGNREGA could have also answered similar questions that exist under the Modi regime. Unemployment, being a direct issue, would also make it an apt manifesto agenda while tackling the monetary issue with regard to poverty.

NYAY, a derivative of UBI, does provide financial support but nothing else. This support still leaves the poor without work or informal work with the onus of finding one on the beneficiary alone. An income support scheme in this regard gets eclipsed by an employment guarantee scheme because the latter provides for a job, money while implicitly increasing nation's workforce or asset (as per economics). There are many questions that remain unanswered as far as NYAY is concerned with uncertainty revolving around exactly what will be the compensation for pulling off this unprecedented scheme for the poor in fiscal terms. The other angle is writing off other schemes which will again be contentious. At this juncture, curiosity hovers whether Congress is serious with its "final assault on poor" or is it just rallying around supposedly utopian methods to pull the voters on its side and register a landslide victory, marking an end to NDA's era. If the latter turns out to be true then it would not be any better than the previous five years for the poor since NDA or UPA, BJP or Congress, it is the same narrative term after term – the poor remains poor with the rich-poor disparity in wealth widening like an obese person!

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