Minimum Income Guarantee Scheme: Jumla or Reality

Rukum Pal, who lived in Delhi’s Sheikh Sarai area, having spent a lot of time trying to get old age pension for three years, is not getting the benefit of the government pension scheme announced in the name of social security. The 63-year-old suffers from asthma and his children do not keep him with them. He lives with his wife on a monthly income of one and a half to two thousand rupees.

By the way, how much difference did a pension scheme of 200 rupees make for people like Rukam Pal? But when we told them that if the government gives benefits of the minimum income guarantee scheme, then how did they feel that they could benefit from it.

In Chhattisgarh, Congress President Rahul Gandhi announced on Monday that he will implement the Minimum Income Guarantee Scheme if his party comes to power. In fact, the scheme is mentioned in the Economic Survey 2016-17 and Arvind Subramanian, the then Prime Minister’s Economic Advisor, described it as an “attractive” scheme and predicted that the plan would form part of the election manifesto. So has the Congress taken this plan before the BJP’s announcement and will the scheme become a weapon to woo voters after farmer loans and better minimum support price?

Shamsher, 42, living in South Delhi, has been unemployed for the past one year. He used to work in a Noida company which has shut down. He is currently alive to help his relatives. They too feel that a scheme like minimum income guarantee will work like a safety valve. It is the suffering of people like Rukum and Shamsher, due to which the Congress party and its supporters are promoting Rahul Gandhi’s announcement as ‘First Mover Advantage’ before the election. However, right now Rahul Gandhi has talked about giving this guarantee only for the poor. It is not known whether he is talking about the rural people or the urban poor.

Feasibility Of The Scheme

Many more questions are associated with this, for example, what will be the basis of deciding the number of poor because many scales of poverty line have been fixed. Apart from this, how much minimum income will be fixed. Until there is no information about numbers and income, it is not possible to find out how much the financial burden of this scheme will be.

It is true that economists from both streams, who are capitalist-minded or left-minded, consider the Minimum Income Guarantee Scheme a good scheme. While the advocates of capitalism feel that this will reduce the subsidies of “waste”, the left economists say that by securing a minimum income, the feeling of social security will increase and the poor will be left with options to do more.

Since the idea of ​​this scheme in the Economic Survey of 2016-17, it is also being told that how many countries of the world are adopting this experiment. Finland, for example, is said to be the “first country to implement a minimum income guarantee” while the fact is that Finland is a much smaller country than India. While India has a population of 130 crore, Finland has a population of less than 6 million. The per capita income in India is less than 1.25 lakhs whereas in Finland the per capita income is more than 32 lakh rupees. Despite this, the “successful minimum income guarantee project” of this country has been limited to only 2000 people, which would be meaningless to compare with a large country like India.

The real challenge is how to collect money for such a big scheme. It is estimated that if 3.5 percent of GDP is spent for minimum income guarantee, then it will be equal to three times of India’s health budget and 10 times of rural employment guarantee scheme.

The Delhi-based National Institute of Public Finance and Policy (NIPFP) studied the data on essential and non-essential subsidies a few years ago and released a report. The economists Sudipto Mandal and S. Sikdar who created this report considered subsidies of facilities like cheap food (PDS), education and water as essential (merit subsidy) and exemptions in fertilizer, petroleum products and LPG as non-essential subsidy (non-merit subsidy) . The study of data from 1987-88 to 2011-12 shows that the expenditure on essential subsidy has increased and the non-essential subsidy has been cut.

What Are The Recommendations?

Economist Pranab Bardhan has calculated on the basis of these figures that up to 10 percent of GDP can be spent on the minimum income scheme by cutting the non-essential subsidy. Bardhan recommends a minimum income of Rs 10 thousand per person per year for this. This amount is less than 1000 rupees a month, but Ashok Kumar, working for social security among the poor living in the slums of Delhi, says that the problem of unemployment and frustration is that even if you get that much money then many people It will be a silver lining for us.

“There is also a lot of running ghost’s diapers. If the poor get some relief in the electoral pulls of BJP, Congress and Aam Aadmi Party, then what is the harm from this, ”says Ashok.

Economist Jean Dreze refused to talk in the context of Rahul Gandhi’s statement, but said that the time has not yet come in a country like India for schemes like minimum income guarantee. In one of his articles, Dreze calls the advocacy of this scheme as “premature articulation”. For this, he cites the economic survey of the government itself, which states, “If not for implementation, then the time has come to consider (minimum income scheme).” While advising caution in this matter Questions are raised in which schemes and how much will the government cut while implementing the minimum income guarantee.

Economic expert of NIPFP, Suyash Rai, says that in addition to cutting the non-essential subsidy, some such subsidies have to be stopped which are given not only to the poor but to the rich. Rai gives an example of exemption available under LPG for this. Here the question arises that will the government buy the middle class resentment to please the poor? Suyyash Rai practically considers the minimum income of Rs 1000 to 1500 per month as correct. They estimate that the government will have to give this benefit to about 10 crore adults.

Accordingly, the government needs a minimum amount of 1.2 lakh crore to 1.8 crore every year for this. Another challenge may be to align spending with the central government and the states. If the government is able to bear this cost with the existing subsidies and social sector schemes, then this announcement is practical or else it will also be called an election jumla.