Today is a historic day..— Rahul Gandhi (@RahulGandhi) March 25, 2019
It is on this day that the Congress party launched its final assault on poverty.
5 Crore of the poorest families in India, will receive Rs. 72,000 Per Year#NyayForIndia is our dream & our pledge.
The time for change has come.
Two economists - Abhijit Banerjee and Thomas Piketty are advising the Congress on this policy. Banerjee, in an interview to Caravan magazine speaks to the policy’s finer points. His approach is to start small and then scale up saying in part, “The goal is to reduce the number of schemes over time and replace them with a transfer, with one efficiently run system.” Both parties have resorted to and promised loan waivers as a way of easing the financial pressures, which some economists have stated isn’t the right approach. A minimum income does not tie down people to farming. Essentially, a policy of minimum income does not discriminate based on occupation.
Congress President @RahulGandhi has announced that if elected to power, 5 crore poorest families will receive Rs 72,000 a year. This Minimum Income Guarantee will be the final assault on poverty.#RahulForBehtarBharat #NYAYforIndia— Devender Yadav (@devendrayadvinc) March 25, 2019
It’s a policy that is gaining traction with the Congress’ latest announcement. Nayanika Mathur, Professor, University of Oxford, argues that for India, this is the right time for a minimum income guarantee. In a column for The Wire, she stated that this follows trends elsewhere. “The talk of a minimum income guarantee is a welcome return to substantive issues of policy and the question of what kind of a country India can imagine itself becoming. Such a state-sponsored system of ensuring a base level of human existence has existed for much longer in Europe, with even the United Kingdom holding onto its system of benefits.” Mathur cites “Give a man a fish” by James Ferguson which talks about cash transfers and basic income in Africa. The argument here is between a distribution model and an employment generation model. One of the main criticisms of the Modi government is that it hasn’t kept its promise of reducing unemployment. Challenges The obvious danger from an economic standpoint is how fiscally responsible is such a policy. The prohibitive costs associated with a minimum income guarantee would certainly be huge and make up a significant portion of the GDP. According to the Economic Times, India collects under 17% of it’s GDP as taxes. NITI Aayog Vice Chairman Rajiv Kumar criticised the policy.
RG seems to have stolen the narrative from BJP by his minimum income guarantee scheme. If implemented properly this could be more revolutionary than the NREGA, which was a game changer for 2009. A small tax on wealth, inheritance and business turnover can pay for this— Prashant Bhushan (@pbhushan1) March 25, 2019
The other challenge, as pointed out by Abhijit Banerjee himself will be targeting. He boils it down to this equation – “would you rather have some poor people left out or would you have some poor get more money?”
True to its past record of promising the moon to win elections, Congress President announces a scheme that will burst fiscal discipline, create strong incentives against work and which will never be implemented. (1/2)#MinimumIncomeGuarantee @PMOIndia @FinMinIndia— Rajiv Kumar ???? (@RajivKumar1) March 25, 2019
More columns by Varun Sukumar