Rahul’s poll pitch to poor: ₹72K income guarantee

PROMISE Says 50mn families with monthly pay under ₹12,000 will be covered

NEW DELHI: Congress president Rahul Gandhi on Monday promised that his party would, if it comes to power, guarantee an income of at least ₹12,000 a month for India’s poorest families by giving them ₹6,000 a month. The head of the party’s data analytics department Praveen Chakravarty explained the provenance of the ₹12,000 number by pointing out that data shows that India’s poorest earn between ₹5,000 and ₹6,000 a month.

Gandhi said the minimum income guarantee scheme, named Nyay (justice) by the party, would cover 50 million families, or 250 million individuals, that constitute the poorest 20% of Indian households.

It will cost ₹3.6 lakh crore, around 2% of India’s GDP, but Gandhi insisted that it was fiscally prudent.

“Remember the number… Congress guarantees 20% of India’s poor will make at least ₹72,000 annually,” Gandhi said after a CWC meeting that approved the party’s draft manifesto, to be released on April 2.

Union finance minister Arun Jaitley said in a blog after the contours of the proposed scheme were announced by Rahul Gandhi that it reflected a failure on the part of previous Congress and Congress-led governments, including those of Indira Gandhi, Rajiv Gandhi, and Manmohan Singh.

He also said that the total promised by the Congress (₹72,000 a year) is just around two-thirds of what the NDA gives the poor.

“This announcement is an admission of the fact that neither Indira ji nor her son and certainly not the UPA government controlled by her descendants, was able to remove poverty. The Congress in general and the Gandhi family in particular, since “Garibi Hatao” slogan was given, has ruled India for more than two-third of that period. If it has failed to even address poverty during this period, why should India believe it? Even though the details of the scheme are now known, it was said that the payment will be by DBT. The Congress Party’s internal economist has said that there will be no additional burden on the fiscal deficit,” he said.

The name Nyay was suggested by party general secretary Priyanka Gandhi Vadra, at the Congress Working Committee meeting at Ahmedabad on March 12, according to a senior functionary. “Nyay” is an acronym for ‘Nyuntam Aay Yojana’ (minimum income scheme).

Back in January, Gandhi announced the guarantee scheme but hadn’t spelt out its broad contours. The government’s think tank, NITI Aayog, criticised the plan then, declaring that India neither had the kind of fiscal space, nor the kind of complete data needed to implement such a scheme.

“This is about justice for the poor,” Gandhi said, insisting that the Congress had done its homework.

“We have checked it again and again and again. It is fiscally, perfectly possible. We committed MGNREGA (rural job guarantee scheme), we did it. We will eradicate poverty from India,” he said. The Congress chief said the job guarantee scheme has pulled 140 million people out of poverty. This, he added, was the second phase.

“In the second phase, 250 million people will be pulled out... It is an extremely powerful, dynamic and extremely well thought-out idea… We have done the calculations,” he said.

The income guarantee plan fits with Gandhi’s campaign pitch that targets Prime Minister Narendra Modi and the ruling NDA, accusing them of working for the rich. “If Narendra Modi can give money to the rich people in the country, then Congress can give the poor this money,” he said.

The scheme is widely seen as a version of universal basic income (UBI), a concept that entitles families to a certain threshold sum of money regardless of whether they work or not.

UBI first became part of the official discourse when the country’s then chief economic adviser Arvind Subramanian proposed it in the Economic Survey 2016-17. But the government did not pursue it.

“The final assault on poverty has begun. We will wipe out poverty from the country,” Gandhi said.

Chakravarty said that the scheme meant that some families would “earn more than ₹12000”, but added that this was fine.

He said a committee of experts will help design and implement the scheme. “We will bring in states because it is a federal scheme. Then we will roll out a pilot and in phases. It is our commitment that all 50 million families will be covered in less than two years.”

As of now, Chakravarty said the total government expenditure of both the Centre and the states amounts to ₹60 lakh crore.

“It is an economic idea and the world over, this has been discussed and debated. It is basically a direct attack on poverty. Secondly, it is remonetising India’s economy and not demonetisation. We are putting money back in the hands of people. Yeh note bandi nahi note wapasi hai,” he said.

In his blog, and a press briefing on the scheme, Jaitley said the scheme actually does less for the poorest than the Modi government has done in the past five years. “In the last five years, the Government headed by Prime Minister Shri Narendra Modi introduced the Direct Benefit Transfer (DBT) through the banking system. Besides subsidies for food, fertilizer, kerosene, 55 ministries handed over subsidies to the poor through the DBT which was enabled by Aadhaar,” he said, adding that this aggregates to ₹5.34 lakh crore a year or ₹1,06,800 a year, “as against ₹72,000 which the Congress now seeks to promise through the DBT mechanism.”

In addition, Jaitley said, there are other schemes of the government that also give money to the poor. “If the Congress Party’s announcement is tested on simple arithmetic, ₹72,000 for five crore families works out to be ₹3.6 lakh crore, which is less than 2/3rd of what is being given - a bluff announcement,” he wrote in his blog.

“The Congress Party’s proposed minimum income guarantee scheme was foreshadowed by Rahul Gandhi’s pre-Budget promise but has since been overtaken by the government’s PM-Kisan cash transfer scheme,” said Milan Vaishnav, director of the South Asia programme at the Carnegie Endowment for International Peace.

“Politically, this may help neutralise the BJP’s scheme but it suffers from two weaknesses. First, the BJP scheme is operational, while the Congress programme is just a promise. Second, voters have been let down by then-candidate Modi’s lofty promises in 2014 to distribute reclaimed black money to every Indian household. Ironically, the PM’s failure has negative ramifications for the Congress’s future pledges.”