It is election time and promises from politicians and parties will come thick and fast. Unbothered whether one or all of them are implementable and there are means to implement them, poll-eve promises ought to be taken with more than a pinch of salt. Happily, in the last 70-plus years of electoral politics if our people have learnt one thing, it is not to take politicians at their face value — there is a wide chasm between what they say and what they do.
Therefore, Rahul Gandhi’s latest winning trick is to promise Rs 6,000 to the bottom 20 percent of the poor households every month. Roughly numbering a little over five crores, the total expenditure on these households would be Rs 3,60,000 crore per annum. Calling it a ‘ground breaking idea’, the Congress President said the cut-off income per family will be Rs 12,000 a month, below which everyone else will be covered by the latest poverty-alleviation scheme from the Congress stable.
More famously his grandmother had swept the 1971 parliamentary poll on the heady slogan of ‘garibi hatao.’ Garibi did not quit India. But the grandson has now launched what he calls the final assault on poverty. Aside from the difficulties inherent in implementing the latest version of the minimum income guarantee scheme for a select number of poor families, the immediate question ought to concern the availability of funds.
Where will nearly Rs four lakh crores come from? Not by levying fresh taxes, we hope. Not by cutting down or outright stopping existing subsidies on such essentials as food, fuel, fertilisers, etc. If not either of them, then by paring down the outlays on public goods such as education, health, etc or reducing the budget for infrastructure development such as roads, highways, bridges, etc. Well, there was no clear idea available from the Congress President when he made his earthshaking announcement on Monday in New Delhi. But then that was not his concern.
He was interested in making a splash with his headline-grabbing gift of Rs 6,000 per month to every poor family below the monthly poverty mark of Rs 12,000. At least in the case of Mahatma Gandhi National Rural Employment Guarantee Act, the payment was linked to actual public works however superficially being implemented by the beneficiaries. Whether they dug holes and then filled them up, the payment of minimum wages entailed actual participation of the beneficiaries in giving their labour in return. Rahul Gandhi’s scheme entails no such obligation.
It is a clean payment of Rs 6,000 per month without any obligation on the part of the recipient to do anything to contribute to the society. But politicians who have lived in the lap of vulgar luxury without anything to do to earn it would not appreciate the value of ‘moral hazard.’ Even rich countries expect something in return from those living on social security.
But Rahul’s version of a quasi-universal basic income scheme seems not to have examined these and other issues for the very good reason that those it is targeted at are unlikely to vote him to power. Nor could it have crossed the Congress President’s mind to bother about the practicalities involved in implementing the scheme since even in their wildest dreams they don’t seem to be in a position to head the next government. It costs little to make empty promises.
Nonetheless the idea of a universal basic income scheme has been around for some time. Former Chief Economic Adviser Arvind Subramaniam in the economic survey for 2016-17 had discussed this, assuming an outgo of about five percent of GDP for covering 75 percent of the population. After a desultory debate in the financial dailies, the UBI suggestion did not find any further traction. Indeed, the cash benefit to farmers announced in the latest budget, already implemented in UP and a few other States, was aimed at alleviating the farm distress.
It was not a universal basic income scheme for the entire farm sector. A country with perennial revenue constraints and unmet demands of key sectors such as education, health, defence, infrastructure, etc., will have to either tax more or borrow more to implement a partial or full UBI scheme.
Recourse to either option will prove counter-productive. The only way out is to increase production, make the economy more efficient, improve the investment climate, bring more people into the tax net, create fresh job opportunities and thus obviate the need to give freebies to the able-bodied population for sitting idle at home. Income without work should be an exception. Not a universal entitlement.