There is a famous quote that India is not a poor country but Indians are poor. It simply means that all resources put together could not eliminate poverty among the country’s masses. Nevertheless, it has hundreds of programmes to uplift the poor or disadvantaged. However, poverty in India is a harsh reality which is said to exist due to lack of employment.
To create employment, Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is still being executed following enacting of a relevant Act in 2005. The scheme thrives to provide employment for minimum of 180 days in a calendar year among the rural poor. No other scheme of such magnitude has ever been instituted in the independent India. Invariably, year-on-year, a sum of Rs 50,000 crore and more have been allocated and spent for the scheme. Recently, an additional allocation of over Rs. 6,000 crore has been announced by the government taking the total allocation to Rs.61,084 crores, which is highest ever in a financial year.
In this context, PM Modi’s next-in-waiting, the Universal Basic Income (UBI) seems like another employment guarantee programme sans employment except that it is a direct cash transfer benefit to the needy and poor.
“UBI was construed as a tool to address the poor in industrialised Western world. Later, it was withdrawn as well. But it has wider potential in developing markets since those economies on their growth course leave behind a larger chunk who are unprepared to meet new challenges immediately ahead.”
Liberalisation in India after its 25 years stint has not bridged the gap between the haves and have nots, rather widened it.
To address the issue, a serious attempt has to be made and its search may end with UBI. Modi may target to distribute about Rs. 2,600 (as suggested by the IMF based on 2011-12 prices for the year 2016-17) to all citizens to enhance their economic activities. Former Chief Economic Advisor Arvind Subramaniam had a chapter in the annual economic survey in 2016-17 and calculated Rs. 7,620 as the UBI for that year.
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Critics say that this will cost more than 10 per cent of the current GDP which is unviable because it is more or less equivalent to the Union Budget. Paying lesser than Rs 2,600 would not be an ideal outreach, since it won’t help anybody to meet any useful expenditure with the handout. Marking a particular amount as UBI after taking into account the poverty line measurements would also be an error as it won’t reflect the reality. Moreover, what is the real idea of an UBI is just to ensure a minimum income for all the citizens. How to fix such minimum income is the real issue. Therefore, instead of UBI, the government should either target poorer and disadvantaged groups or make efforts to bring an alternative proposal to enhance the livelihood of all the citizens.
Modi’s interest might have been caused by the success of ‘Rythu Bandhu’ scheme which catapulted the fortunes of Telengana Rashtriya Samithi to retain power in the state. Under the scheme, farmers are provided with Rs 8,000 for each acre per annum irrespective of cultivation and holding rights etc. Many states tried their hand in similar schemes invariably.
What is a livelihood guarantee?
Today, cost of living in cities and impoverished rural regions has become acute and people struggle to survive with meagre resources. They face education and health expenditures which cripples their lives and they fall in debt due to medical expenses in particular. Though the Prime Minister’s Ayushman Bharat, the universal insurance has been brought in, it is yet to reach every needy household.
Education is another issue though state governments at their maximum provide free and compulsory education for all. Physical infrastructure which is vital for urban-rural economic exchange and connectivity and is used by poor artisans and craftsmen community for their livelihood has to be supported with modernisation. Taking into account these factors, there should be an integrated approach for providing assistance to overcome the burdens of such hardships.
“All the Jan Dhan account holders would be now seeded with Aadhaar and their Family Fairshop Cards. By integrating those households into the system of full cost compensation per annum, the expenditures would be more precise and will reduce bureaucratic delays. This will save public revenue.”
Deriving such figures is not difficult since market rates are available with state governments and they need to just reimburse the cost incurred.
Infrastructure costs are those costs incurred by professionals across the state to make a decent livelihood. For example, a farmer who may need farming implements or a carpenter may need tools shall be distributed through such a network after obtaining GST bills in support of such expenditures. Through such DBT payments, employment and income generation would happen at faster rate compared to the current level.
Central and state governments could start a pilot project to ascertain ground realities and changes needed in necessary laws or to enact a new one for executing the Livelihood Guarantee Scheme. Instead of providing UBI, government should look to reduce the burden as well benefit the needy and deserving in a poignant way. Moreover, including both poor and disadvantaged sections along with peripheral poors (mostly comprise of lower middle class public) who fluctuate between haves and have nots in sequential years would give inclusive growth concept an immortal touch.
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Cost incurred for Livelihood Guarantee Scheme would not be more than funds allocated for loan waiver schemes and MGNREGA. In the case of first one, economists and agricultural lobby pinpoint to its effectiveness since it has to be repeated because remunerative prices are below the market prices and in case where farmers get below the MSP with abundant cultivation. During the current financial year, state governments provided or promised to provide around 1 lakh crore towards loan waiver.
The MGNREGA is also under criticism for its lack of effective implementation across the country. In addition, the callousness of in usage of public resources should be curtailed. Livelihood Guarantee Scheme would be an ideal replacement for such mega budget social assistance and would be a game changer if it is executed with vigour and accuracy.
