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Garibi Hatao Redux!
The recent poll-eve announcement of Nyuntam Aay Yojana’, (NYAY),or minimum income guarantee scheme by Congress president Rahul Gandhi entailing the provision of making available Rs 72,000 per year to the poorest 20% families in the country, if voted to power, is reminiscent of the Garibi Hatao scheme launched by the then prime minister Mrs. Indira Gandhi in the 1970s and concomitantly it also raises the question as to whether it is going to be redux of the Garibi Hatao or a mere election rhetoric. In the wake of NYAY announcement, mixed reactions have been reported; nevertheless, the economists have raised two key pertinent questions that require answers, especially in the absence of further details. In the first place, it is desirable to know whether the NYAY scheme would replace the existing subsidies ranging from food to fertilizers or would be offered as a cash dole over and above them. Secondly, there will be a problem of identifying the eligible households in the absence of the income data. With the clarification by Congress spokespersons on March 28 that existing subsidies that are being granted to meet specific social or economic objectives will not be touched to implement the NYAY, the first question stands answered. Answer to second question would become apparent when the party comes to power and commands the resources generating such data.

Many experts have opined that given the intricacies of Indian economy, it is tremendously problematic to collect income data of all individuals on an annual basis. This is primarily because about 90% of the working population is engaged in informal sector, which does not have a fixed pay structure. There exist significant differences in the incomes of the self-employed, farmers, agricultural labourers, migrants and urban informal manual workers from year to year. It is to be acknowledged that the direct benefit transfer would be an efficient way to address poverty, given the pilferage, rampant corruption and inefficiency in the delivery mechanism of welfare schemes. Success of schemes like MGNREGA launched by the Congress-led UPA government have been instrumental in uplifting a large number of people out of poverty. According to the Global MPI 2018 Report prepared by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative, India has reduced its poverty rate drastically from 55% to 28% in 10 years, with 271 million people moving out of poverty between 2005-06 and 2015-16. However, the report laments that India still had 364 million poor in 2015-2016. It is further revealed that poverty reduction among children, the poorest states, Scheduled Tribes, and Muslims was fastest in India. Of the 364 million people who were MPI poor in 2015-16, 156 million (34.6%) were children. In 2005-06 there were 292 million poor children in India, so the latest figures represent a 47% decrease or 136 million fewer children growing up in multidimensional poverty.

The report also makes it discernible that although poverty reduction rate was high among Muslims and STs over the 10 years, these two groups still had the highest rates of poverty. While 80% of ST members had been poor in 2005-06, 50% of them were still poor in 2015-16. And while 60% of Muslims had been poor in 2005-06, 31% of them were still poor in 2015-16. According to the report, Bihar was the poorest state in 2015-16, with more than half its population in poverty. The four poorest states —Bihar, Jharkhand, Uttar Pradesh, and Madhya Pradesh — were still home to 196 million MPI poor people, which was over half of all the MPI poor people in India. Despite conflicting estimates about poverty in the wake of contradictory data, India has been successful in uplifting a substantial chunk of poor people out of poverty; nevertheless, poverty still remains a substantive issue. The ‘NYAY’ scheme is expected to entail an annual expenditure of Rs 3.60 lakh crore, equalling 13% of the total government expenditure and more than 20% of the Centre’s net tax collections. Implementation of this scheme may require redefining the poverty criteria afresh along with fine-tuning balance between the available budgetary space and the need to eliminate distortionary subsidies before going ahead with such cash dole-out policies. The Aadhaar mechanism, penetration of banking services, mobile phones and the online facilities hold key to successful implementation of NYAY.

Babuddin Khan
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