To make Congress’ big election promise work, political courage of a kind not seen in India would be called for. Rahul Gandhi has revealed the details of the income-support scheme he had announced earlier as Congress’ major election plank: an end to poverty via a transfer of Rs 72,000 per family, on average, to five crore poor families, to bring their monthly income up to Rs 12,000. That works up a bill of Rs 3,60,000 crore, about 13% of the Centre’s budget, as large as the explicit subsidy bill plus the outlay on the national employment guarantee scheme. It is also about 14% of the taxes collected by the Centre. The policy can be ruinous, if it adds on to existing subsidy. It can be redemptive, if all extant subsidies are reconfigured and some repressed prices allowed to rise.
Gandhi promises to make good the difference between what the poorest five crore families earn per month and the income of Rs 12,000 deemed necessary to lift a family above poverty. That is assumed to be Rs 6,000 per family per month on average. The government should still be left with funds to perform essential governance tasks and developmental expenditure. This can happen only if all present subsidies are subsumed into the new scheme. Roll food, fuel and assorted interest subsidies and the employment guarantee scheme outlay into Nyuntam Aay Yojana — shortened into NYAY, which means justice. Fold fertiliser subsidies into another income-support scheme for farmers. Then, raise user charges to realistic levels for power and water. More significantly, an income cushion for the most vulnerable can create room for ending farm price repression, which is the only way to end entrenched rural distress.
If an income-support scheme paves the way to ending power giveaways and theft, it would almost pay for itself, restoring health to the crippled power sector. But all this calls for oodles of political courage. Political courage has been in short supply, leaders preferring patronage and identity politics to mobilise support. Minus political daring, the scheme can spell ruin or jumla.
This piece appeared as an editorial opinion in the print edition of The Economic Times.
via Justice for the poor or path to ruin?