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Congress poll pledge: Rs 72,000 a year for the poorest

, ET Bureau|
Updated: Mar 26, 2019, 06.54 AM IST
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Minimum Income Guarantee Scheme: Is Rahul Gandhi's Lok Sabha Poll promise fiscally viable?
Minimum Income Guarantee Scheme: Is Rahul Gandhi's Lok Sabha Poll promise fiscally viable?

Highlights

  • Rahul Gandhi has promised Rs 72,000 per year for the poor in his minimum income poll assurance.
  • The scheme will benefit the poorest 20%.
  • Five crore families and 25 crore people stand to benefit from the scheme.
  • Gandhi will brief the media about his plan today.
NEW DELHI: The Congress on Monday announced it will transfer Rs 6,000 a month in the bank accounts of 50 million families — comprising the poorest of the poor — if it comes to power, in an effort to turn the focus back on economic issues ahead of next month’s general elections.

Unveiling his party’s Rs 3.6 lakh crore campaign promise of a minimum income guarantee scheme, called Nyuntam Aay Yojana (NYAY), Congress president Rahul Gandhi said the big idea is to ensure that the basic income of every poor family in India does not fall below Rs 12,000 a month.

“The 20% poorest of poor families would get Rs 72,000 directly transferred in their accounts. This is the final assault on poverty,” said Gandhi.

The Congress, which had introduced right to work through the Mahatma Gandhi National Rural Employment Guarantee Scheme, is terming this as MNREGA-II. “We alleviated 14 crore (140 million) Indians out of poverty through MNREGA-I. This is the second phase where 25 crore (250 million) people will be alleviated,” said Gandhi.

STUDY BY THREE-MEMBER PANEL
Finance Minister Arun Jaitley, however, dismissed the announcement as a “complete eyewash”, claiming that the government was already transferring more than what Congress has budgeted.

“If all welfare schemes, including MNREGA, Ayushman Bharat, fertiliser subsidy, are added, the government spending would be Rs 7.8 lakh crore… the beneficiary is already getting a larger sum, but they are just coming in eight different cheques,” he said.

According to the Congress, the scheme would bank on different data sets to determine the beneficiaries. The initial exercise conducted by the party has used the Socio Economic Caste Census 2011 to determine the extent of the scheme. The government also uses SECC to determine beneficiaries for its key social sector schemes like PM Ujjwala Yojana and PM Awas Yojana.

Congress’ internal calculations have pegged the cost at 1.5% of GDP. The Centre and the states would share the fiscal burden. “A notional limit of Rs 12,000 per month has been set, which is required for every family to subsist. Once a family crosses this limit, it would be out of the ambit of the scheme,” Praveen Chakravarty, head of Congress’ data analytics department, told ET.

The Congress estimates that at least 20 million families in India earn less than even Rs 6,000 per month. The scheme, Congress insiders said, was formulated after a detailed study by a three-member committee comprising former prime minister Manmohan Singh, exfinance minister P Chidambaram and Chakravarty. The committee studied income distribution in detail besides consulting international economists and sociologists to finalise the contours of NYAY. Chidambaram gave a detailed briefing to the Congress Working Committee (CWC) on the scheme as well as the manner in which it should be rolled out.

The plan is to form an expert committee if the party comes to power with a three-month deadline to work out the specifics — identification of beneficiaries, pilot projects and periodical review mechanism.

The scheme will be first rolled out as a pilot project in different states to test the disbursal mechanism and then implemented in phases. “All the beneficiaries would be covered in 2 years,” said Gandhi.

During discussion in the CWC, the party considered two slabs for NYAY – the bottom 10% and the next 10% of families with comparatively higher incomes. However, the party decided in favour of a unified unconditional income guarantee of Rs 6,000. This also stands in contrast to the recently introduced PM-KISAN, which promises Rs 6,000 a year to small and marginal farmers. Gandhi was quick to point this out as he said, “The BJP government has promised Rs 3.50 per day to our farmers.”

During the CWC discussion, Chidambaram called it a “fiscally prudent” scheme which would “remonetise the economy”. Chakravarty said, “Over the years it has been found that mere GDP growth does not contribute in increasing income. The trickle-down effect is not working as efficiently as we thought. So we have an obligation to the citizens, a social contract, now. This would be note wapsi as we put money back into the hands of the people.”

Though it hasn’t been tried in India, the world has experimented with the idea of guaranteeing a minimum income. In Brazil, a minimum income was guaranteed but was conditional as it was linked to families sending children to school. In 1967, then US President Richard Nixon tried introducing it through pilot projects. The idea of the scheme, according to Congress functionaries, was first mooted in 1934 at AICC session under Netaji Subhas Chandra Bose where it was decided that everyone should have minimum standard of living. A committee under Jawaharlal Nehru was formed but could never finish its work as Quit India Movement started in 1942.

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