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4-min read

Where is the Machinery for it? Expert Questions Feasibility of Rahul Gandhi’s Income Guarantee Scheme

Congress president Rahul Gandhi on Monday announced a 'historic' income guarantee scheme which, he said, will cover five crore families and benefit nearly 25 crore people.

Debayan Roy | News18.com

Updated:March 25, 2019, 11:01 PM IST
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Where is the Machinery for it? Expert Questions Feasibility of Rahul Gandhi’s Income Guarantee Scheme
Congress president Rahul Gandhi.
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New Delhi: Congress president Rahul Gandhi on Monday announced a “historic” income guarantee scheme which will ensure India’s 20 per cent poorest families get Rs 72,000 per annum.

Addressing the media after the Congress Working Committee meeting, Gandhi said the scheme — that he referred to as the “final assault on poverty” — will cover five crore families and benefit nearly 25 crore people.

However, Himanshu, an associate professor in economics at Delhi’s Jawaharlal Nehru University, told News18 that "just by promising moon to everyone" poverty cannot be eradicated as concerns of those who are not part of the labour market should be addressed first.

The JNU professor, who specialises in areas of poverty, questioned if the Congress can raise the pension for widows and disabled before "promising moon."

"If one has to really check the depth of the commitment, what about those who cannot participate in the job market? What about the widows, the elderly or the disabled? They have been given a social pension. Why is it that their social pension has not increased upto Rs6,000? Can the Congress at least do it in those states where it is in power? If the government cannot do it for those who are not able to even participate in the job process, promising the moon to everybody is not the best way to address poverty," said Himanshu.

He stated the announcement of the NYAY scheme meant the Congress has agreed that "economic growth did not lead to poverty eradication."

"It comes from the understanding that normal economic growth has not led to eradication of poverty and that in itself is a big announcement. Now it is to be seen if we have accepted whether economic growth has no role in poverty reduction" he pointed out.

Himanshu, associate professor in Economics in the Centre for Economic Studies, also questioned how the scheme would be implemented and how one would determine the income level of a household.

"This announcement is based on the fact that there is going to be an identification of 20 percent of the population. What if 30 percent of the population is earning less than 12,000 a month? " asked the expert.

He said the threshold of Rs 12,000 set by Rahul Gandhi will be hard to determine as most income of poor is not regular.

"How are these people going to be identified? How are they going to ensure that government will be able to check how much are they earning per month and how much is the shortfall? Where is the machinery for this? This is impossible because incomes are not regular and more than variations in income, it is a fact that they also have no idea of how much they are earning," said Himanshu.

The Congress chief did not give details on how the party arrived at the Rs 72,000 figure, leaving it for committee head P Chidambaram, a former finance minister, to explain on a later date.

He, however, said the Congress has studied the fiscal implications and consulted renowned economists and experts before finalising the scheme.

But Himanshu questioned that by giving out cash transfers, the government would push the poor towards private sector as there would be an imbalance in-demand and supply as far as government opportunities were concerned.

"If this scheme leads to reduction in money being spent on education and health, it will basically mean taking money from one pocket and putting it in another. This will lead to money being spent on private education and health. Then what would be the purpose of the scheme? It will be then an indirect subsidy to the private sector," he said.

Furthering his critique on the structure of the cash transfer program, Himanshu said that if "people are not provided good food, health, sanitation and education, then giving them just money will push them into private sector".

"If you don't have supply, giving money will only create a demand which then will be met by the private sector. So who will benefit from this? This is not the only way to attack poverty. There are different ways to attack poverty," said the former research fellow in economics at the Centre de Sciences Humaines.

Congress has been raking up the issue of unemployment over the past few weeks, taking digs at the ruling BJP. But Himanshu says with the announcement it made on Monday, it has accepted that "jobs are not on the agenda."

"By empowering the poor, they are made capable to take part in the economic process which leads to economic development or growth and this can happen through various options. Now, with this announcement, it is also being accepted that jobs are not on the agenda. That is why one needs to give them something outside the economic growth process. This is the conceptual issue to understand here," Himanshu told News18.

He further questioned how the previous UPA government had itself stated that because of economic growth they reduced 122 million people out of poverty. "Why have they given it up now?" questioned the professor.

The NYAY scheme does not mean everyone gets the Rs 12,000 dole. For instance, if a family earns Rs 6,000, the government will chip in the rest to raise the monthly family income to Rs 12,000.

Talking about the Congress manifesto, Gandhi said it covered everything from education, health and jobs. He also attacked Narendra Modi, saying if the Prime Minister could give money to the rich, “Congress can give it to the poor”.
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