Welcome to The Election Fix. On Sundays, we take a closer look at one theme that will play a significant role in India’s Lok Sabha elections.
This week, we look at the Congress’ minimum income guarantee promise, what the BJP is claiming in response and check out Mridula Chari’s special reports from Odisha and Telangana.
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The Big Story: Bare minimum
After first announcing a minimum income guarantee as the big Congress promise back in January, party president Rahul Gandhi gave more details about the scheme this week: Rs 72,000 per year for India’s poorest 20%. That is a major promise, coming so soon after Prime Minister Narendra Modi’s income support of Rs 6,000 per year for farmers, and just the kind of policy subject that we like to dig into on this newsletter.
Start with the details themselves. The programme will be called NYAY, itself meaning justice, but expanding to say Nyuntam Aay Yojana, which translates to Minimum Income Scheme.
The Congress is promising Rs 6,000 per month to a fifth of the Indian population, or about 5 crore households. The party says that, after study, it came to the conclusion that Rs 12,000 per month should be the minimum income level for a household and that the average income level for the poorest 20% is currently Rs 6,000.
So it is promising flat income support of Rs 6,000 per month to these families, which comes out to Rs 72,000 a year.
Initially there was some confusion about whether this would be a top-up scheme, in part because Rahul Gandhi himself used that term. That would involve calculating how much the poorest households make and providing them the difference between that and Rs 12,000 per month. But the Congress later clarified that this is a flat transfer of Rs 72,000 per year to the poorest 20%.
Two main questions arise:
How will the government identify the 20%? Targeting the poor has been one of the biggest problems for India’s welfare programs, and NYAY will be known different.
And how will NYAY be paid for? A simple calculation of Rs 72,000 per year multiplied by 5 crore households comes out to Rs 3,60,000 crore per year. That would be just under 2% of India’s Gross Domestic Product, a huge outlay.
For now there are no concrete answers. The Congress has said that specifics like that will be worked out if and when they come to power, with a committee, pilot projects, and then a phased rollout. Regardless, Rahul Gandhi has insisted that the scheme is possible within current financial limits.
Analysts have many theories for how it would work and thoughts about the programme in general. Here are a few of those pieces:
- Vivek Kaul in Mint addresses five concerns about the Congress minimum income scheme.
- Ila Patnaik in the Hindustan Times points out the targeting challenge, including fears that households may under-report income to come within its ambit.
- Pratap Bhanu Mehta in the Indian Express brings up the way we talk about poverty alleviation programs, saying, “guaranteeing a minimum sense of economic agency is not a dole. Politically, it is the very basis of the legitimacy of any society.”
- Jean Dreze says there are two schools of thought around such a programme, the inclusive section that wants income guarantee to sit alongside subsidies and the assertive sort who would prefer all subsidies are replaced by a minimum income.
- Devangshu Datta says that research suggests something like this could work, but first it has to work for the Congress party’s election campaign.
I also have a Twitter thread up, linking to much more analysis of NYAY, which you can see here.
For the Record
What is the Congress up against?
The immediate comparison appears to be Prime Minister Narendra Modi’s Pradhan Mantri Kisan Samman Nidhi Yojana, also known as PM-Kisan. That too is an income support scheme, though specifically for farmers, and one that is modelled after Telangana’s Rythu Bandhu scheme.
Under PM-Kisan, the government gives Rs 6,000 per year to small farmers, a programme with a budget of around Rs 75,000 crore.
Rs 6,000 a year, from the Modi government versus Rs 6,000 per month from Congress is a significant difference, which is why the BJP would want you to look at the larger question of what it provides to citizens.
Finance Minister Arun Jaitley put out a blog post arguing that currently the Modi government is spending Rs 5,34,000 on all its schemes aimed at the poor – and so is giving more to them than what the Congress promises. While it is possible to make this argument on paper, how the BJP will actually counter the Congress promise on the ground remains to be seen.
Towards the end of the Congress-led United Progressive Alliance era, as it began to seed Aadhaar with bank accounts (with no legal backing), the government began giving money directly to beneficiaries through a system called Direct Benefit Transfer. After Modi came to power, this was expanded in a big way.
The approach was based on what former Chief Economic Adviser Arvind Subramanian called the JAM trinity: Jan Dhan Yojana (a programme aimed at making it easier for the poor and unbanked to get bank accounts), Aadhaar (the controversial 12-digit biometric identity scheme) and Mobile phones.
Subramanian argued that these three together made it much easier for the government to reach out to beneficiaries than before, although questions have been raised about both the Jan Dhan Yojana and Aadhaar.
In 2017, Subramanian went a step further. He used the Economic Survey that year to make an argument for a Universal Basic Income, the idea that every citizen should be promised a minimum income from the government that replaces other subsidies. Read more about Subramanian’s proposal for a UBI here.
A key ingredient of the argument for a minimum income scheme is that India’s current subsidy system remains badly targeted, with money often not being spent on the districts where it is most urgently needed.
One could argue that it was this chapter of the 2017 Economic Survey, and growing discussions about things like UBI the world over, that eventually prompted the Congress too to consider an income support scheme. The Congress proposal though, is not about universal basic income and, so will face the one big issue that any government programme that isn’t “universal” (like UBI) or self-selecting (like Mahatma Gandhi National Rural Employment Guarantee Act or MGNREGA) faces: How will the needy be identified?
Mridula Chari has a series of stories on Scroll.in this week that look at some of these questions. She reported from Odisha and Telangana on everything that goes into the farmer income support schemes that those states have carried out.
- Income transfers are hottest trend in agricultural policy. But how do states identify beneficiaries?
- Most vulnerable farmers are left out as states across India start money transfers to farmland owners.
- Can Telangana and Odisha afford the money they want to give their farmers?
In some ways the debate over these programmes is replicating similar conversations that took place in the Congress-led United Progressive Alliance years, when the government then introduced the Mahatma Gandhi National Rural Employment Guarantee scheme.
Then too arguments were put forth that the government was essentially handing out money for nothing, and that the projects that were built under the MGNREGA scheme were things like ditches that did not actually amount to asset creation.
Yet the MGNREGA’s assurance of 100 working days a year to those who wanted it acted as a safety net for those in the rural economy and avoided targeting problems by letting potential beneficiaries identify themselves. While it “helped dent poverty, reduced distress migration and raised the bargaining power of rural labourers, especially among lower castes and women, the biggest beneficiaries of the programme,”
some critics argued this also led to inflation.
When Modi came to power in 2014, after the BJP had spent years arguing against MGNREGA, he called the programme a “living monument” to Congress failure. Yet its tremendous popularity meant that the Modi government did not kill the scheme, though there are accusations that it has mismanaged it, particularly in not paying wages in time.
Regardless, MGNREGA has continued to receive a significant amount of money from the government every year, though many have argued that the increases have not been sufficient.
Over the years, politicians have taken different approaches to addressing the question of alleviating poverty. The most famous of these is former Prime Minister Indira Gandhi’s counter to her opponents in 1971 going with the slogan “Indira Hatao” (Get rid of Indira). Indira Gandhi at the time replied, “woh kehte hain ‘Indira hatao’; main kehti hoon garibi hatao”. (They say, “banish Indira”; I say “banish poverty”).
The phrase Garibi Hatao went on to be possibly the most famous bit of political marketing India saw for decades until Prime Minister Atal Bihari Vajpayee’s government took a different tack altogether in 2004. Confident after his first full tenure, Vajpayee went into the 2004 campaign with an aspirational slogan, “India Shining”, meant at conveying the progress that the country had made under him.
Instead, many Indians evidently did not feel that the country was shining quite enough, and Vajpayee was voted out of power, a result that very few saw coming.
The following Congress government focused on a rights-and-entitlements based approach, bringing in things like the MGNREGA, Right to Education, Right to Information, Right to Food as well as a farm loan waiver scheme that saw them winning two terms before being comprehensively defeated in 2014.
Modi’s campaign over 2013 and 2014 borrowed something from the right-wing economic thinkers that were his staunchest supporters, despite his record with minorities and mass violence. He promised “Minimum Government and Maximum Governance”, and even as recently as 2018 was arguing against farm-loan waivers and instead suggesting that his approach to entitlements was to empower citizens rather than simply hand out money.
Yet the Modi government did not take too different a tack from the previous one, moving further towards direct benefit transfers, keeping MGNREGA and towards the end, introducing PM-Kisan.
Congress has now returned to an updated version of “Garibi Hatao” in its campaign, with Rahul promising that NYAY will be the “final assault” on poverty.
Do voters care
It may still be too early to get a sense of how voters are responding to either PM-Kisan or NYAY. Akash Bisht, who is reporting in Uttar Pradesh at the moment, sent in this dispatch from Baghpat and the surrounding areas:
“Many people are still not aware about NYAY. Some are saying it’s just an election promise, or a jumla (a promise that doesn’t lead to much) other are saying it’s possible, if Modi can give money for PM-Kisan, so can Congress.
People are not really talking about it yet though. Even the Congress leaders on the ground have not spread the idea or explained how they will do it.
“With PM-Kisan some have got the money, but most I have spoke to haven’t, so there is some unhappiness there, and a conspiracy theory whether only those close to the BJP have got it. Meanwhile, laboureres are asking why it is only for farmers. So its impact so far seems mixed.”
We will have more on this in subsequent weeks, including additional reporting and presumably polling on the question. Meanwhile, you could go back and read Akash Bisht’s reports from Muzaffarnagar and Saharanpur.
Tell us what you think of the PM-Kisan versus NYAY debate by writing in to firstname.lastname@example.org
The Modi Years
As part of Scroll.in’s election coverage, we took a close look at all the major initiatives, milestones and controversies of the last five years. You can read all of the pieces in The Modi Years series here, or watch the first episode focused on the BJP’s promise to build a 100 Smart Cities below: