Cong’s ₹72,000 cr a year promise to the poor can be game changer… – The Hindu BusinessLine

The Congress party on Monday announced that it would give the poorest 20 per cent households in India assured income of ₹72,000 a year, if it formed the government at the Centre following the general elections.

Party president Rahul Gandhi said the objective is to ensure that no household in the country fell below minimum income threshold of ₹12,000 per month. An estimated five crore households or 25 crore people can expect to benefit from such a scheme, Gandhi told the media here.

Union Finance Minister Arun Jaitley termed the Congress proposal “a bluff announcement” and said that the amount promised was far lower than the ₹1.06 lakh that the current government was giving as subsidies to the poor households under direct benefit transfers.

Experts, however, say that the proposal to transfer up to ₹72,000 a year to five crore poorest households can be game-changer though its implementation could face many challenges.

Targeting of the scheme, named Nyuntam Aay Yojana, would be a key problem because India does not collect income data. Official poverty line has so far been determined using the household consumption expenditure data collected by the National Sample Survey Organisation (NSSO). Effective implementation of such a scheme can also be scuttled by various vested interests, as has been the case with many welfare programmes such as the Mahatama Gandhi National Rural Employment Guarantee Scheme.

Sociologist Sarath Davala, who is the vice-chair, Basic Income Earth Network, and coordinator, India Network for Basic Income, is optimistic about implementation of the scheme. “It is doable” he said, adding that income transfer schemes have better chance of succeeding than programmes where the transfer is in form of kind, such as grains. Transfers would be made directly into a bank or a post office account of the beneficiary, and that reduces the likelihood of leakages.

“However, the project would need a lead time of two-three years to identify the beneficiaries and create the infrastructure for transfer of the money,” he added. “Ideally, they should take their time to implement it and do it well.” Aasha Kapur Mehta, visiting professor at the Institute for Human Development, who specialises in welfare and development economics, is however as not as confident about successful implementation. “He has his heart in the right place, but implementation will be difficult,” she said. The success of welfare schemes depends on decisions regarding implementation and eligibility that are taken at the village level by the sarpanches and gram sabhas (that may or may not actually be held), she explained, adding that there would be all kinds of pressures to hijack benefits that will be at work.

“Ensuring that it is the poorest who get the benefits can be difficult. Often, it is the ones who are politically connected who are among the first to benefit from welfare schemes,” Mehta noted, adding that this was seen in the implementation of schemes such as Pradhan Mantri Awas Yojana. Even where determining eligibility and identification is easy, as in the case of the National Old Age Pension or Disability Pension, many remain excluded.

May help rural areas

Davala felt effective implementation of the scheme can help alleviate rural distress. An amount of ₹6,000 a month is a quite a substantial amount in rural areas and not all of it need be used for consumption he said.

A pilot project of income transfers implemented in poor districts of Madhya Pradesh by SEWA and UNICEF found that people use some of that money to invest in income generating assets and start small enterprises.

via Cong’s ₹72,000 cr a year promise to the poor can be game changer… – The Hindu BusinessLine

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