Dhaka, Bangladesh
Dole Raj but no Raja yet

Dole Raj but no Raja yet

Election time in India is always a time for doling out freebies, but the elections of 2019 are beating all expectations as the two major political parties are engaged in fierce and competitive populism. Both the Bharatiya Janata Party and the Congress are united as one party borrows populist ideas from the other while trying to outdo each other. Promising sops is much easier than creating jobs which demands ideas, vision and deft management. Running out of ideas, all parties find it easier to join the race to the bottom. So, welcome to the approaching Dole Raj in India, regardless of who becomes the Raja. The Congress has been a pioneer in doling out populist handouts; now all other parties are trying their best to emulate its example while promising distribution of national resources in the name of welfare without bothering about the means. The latest in the Congress's ingenuity is its promise of a guaranteed minimum income (Nyuntam Aay Yojana or NYAY) of Rs 6000 every month to 20 per cent of the poorest households. The expenditure, estimated to be around Rs 5 crore, has been projected as the final surgical strike on poverty. Earlier, in the interim budget presented in February, the Modi Government had announced the Pradhan Mantri Kisan Samman Yojana (PMKSY) to provide each farmer with less than 2 hectares of agricultural land, a direct benefit transfer of Rs 6000 a year, drawing inspiration from Telangana's Rythu Bandhu income support scheme to the farmers. At 12 times more ambitious than PMKSY, NYAY will cost the exchequer a whopping Rs 3.6 lakh crore. Bad economics is seldom good politics, and it remains to be seen if the massive sop that will dwarf MNREGA will succeed in hoisting the Congress to power. Of course, as Rahul Gandhi has rightly said, poverty has no place in the 21st Century India and NYAY is his method to eliminate poverty in one fell swoop, for which farm loan waivers have proved to be inadequate. The relief packages and waivers for farmers announced by states ruled by the BJP, the Congress and other parties have so far exceeded Rs 2.3 lakh crore. SP has promised 100 per cent loan waivers, and besides waivers, there are many bizarre and stellar promises with substantial fiscal implications being made by all parties. But NYAY beats them all. A sop is actually a redistribution of income from the rich to the poor and is sustainable only by high growth in the absence of which, it will only redistribute poverty. Only sustained capital investments can fuel growth and address poverty in the long term, and when capital investments have to compete with sops for funding, poverty is institutionalised. Besides the cost of financing, any redistribution also has to address the question of efficiency of delivery. While financing is about fiscal numbers, delivery relates to the capacity and efficiency of the administrative apparatus. When winning elections is permissible at any cost, economics and fiscal numbers may be disregarded, but delivery assumes importance after winning the elections, and then the cost can be disregarded no more as parties have to face elections again. The idea of NYAY has been borrowed from the 2016-17 Economic Survey, which examined the proposal of a Universal Basic Income (UBI) scheme to cover the bottom 75 per cent of the population while cutting down on some subsidies. It suggested transfer of an income of Rs 7,620 per person per annum, based on Tendulkar's poverty line of 2011- 12, inflation-indexed to 2016-17, which would cost 4.9 per cent of India's GDP, compared to 5.2 per cent of GDP spent on all the 950 central and centrally sponsored schemes, to address the problems of poverty as well as delivery. Definition of poverty and size of the poor in India are contentious issues and estimates vary widely. In 2011-12, 21.9 per cent of the population or 269.3 million Indians were estimated to be poor, following Suresh Tendulkar's method. The World Bank estimated in 2015 that 12.4 per cent or 172 million people, about 36 million households, were living in extreme poverty, below its global poverty line of $1.90 per day. By whatever standard poor households are identified, the identification of the eligible families would be a nightmare, as the poor are employed overwhelmingly in the informal sector on which we hardly have any reliable data, let alone data on income. The identification exercise would necessarily have to involve public officials from blocks, districts and panchayats, including elected members of legislatures, thereby opening up huge channels for corruption. (To be continued)

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