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Minus Rs 72,000 for poor, Congress Manifesto 2019 makes right noises; Rahul's NYAY will be party's headache

The Congress party, as expected, has picked up the most relevant economic talk points to frame its 2019 poll manifesto — unemployment, agriculture crisis and poverty alleviation. Of all the promises, Gandhi's much-hyped minimum income support programme (MISP) or Nyuntam Aay Yojana (NYAY) stands out. Already, this scheme is the biggest discussion point in political forums, particularly with respect to the feasibility and relevance of the idea.

Gandhi wants to give the poorest 20 percent of India a minimum income of Rs 72,000 annually and believes this free cash transfer will eradicate poverty in this segment. Before this scheme came, Gandhi’s usual populist card before every election was a farm loan waiver. Now with most states implementing it, Gandhi had to invent a new design to populism. The loan waiver carrot has become too old fashioned and minimum income seems to be the new populist card. Understandably, that idea dominates the manifesto.

 Minus Rs 72,000 for poor, Congress Manifesto 2019 makes right noises; Rahuls NYAY will be partys headache

File image of Rahul Gandhi, Manmohan Singh and P Chidambaram. PTI

Then comes the unemployment issue. The promise here is that about 22 lakh government jobs lying vacant will be filled up by March 2020. This is crucial, not because of the number (22 lakhs) but the clear assessment that there is an unemployment problem in the country and the party has looked at some of the workable options to address the problem — something the current regime has consistently downplayed. Filling up government job vacancies is not a big step to address the larger unemployment crisis but its time-bound implementation would offer confidence to the jobless youth that a political intent is existing.

The third big highlight is the promise to appease the embattled farmers. Gandhi's party has proposed to have a separate 'kisan budget' and make non-payment of loans by farmers civil offence instead of criminal one. A separate farmer budget is no big deal; what is required is a comprehensive road map on how the farm distress can be addressed by revamping the market infrastructure and efficiency enhancement. Then there are other usual agenda items such as batting corruption, women's security, etc. At the first glance, Congress's 2019 Lok Sabha Election manifesto has made all the right noises even though the Rs 72,000 NYAY scheme comes across as a poorly thought about idea. That, if the party wins the 2019 polls and forms government at the Centre, will be the party’s biggest headache in terms of implementation.

There are three relevant questions here:

First, how will the scheme be funded should the party indeed implements it? Going by the Congress manifesto, the scheme will be funded through new revenues and rationalisation of expenditure. Current merit subsidy schemes that are intended to achieve specific objectives will be continued. This is easier said than done.

There are nearly 950 centrally-sponsored schemes. These schemes target the economically weak in each area and assist them through state funding. It is nearly impossible and unwise to go back from this targeted approach and fix minimum income to all because then the purpose of addressing specific problems is lost.

A back of the envelope calculation shows that the total burden of Gandhi’s minimum income promise will be Rs 3.6 lakh crore. That’s 1.7 percent of the country’s Gross Domestic Product (GDP). We are talking about an economy that has breached the fiscal deficit target for three consecutive years and is struggling to mop up revenues to keep its balance sheet healthy. Where is the room for expenditure reduction particularly when the manifesto speaks of a significant increase in allocation to sectors like education? Finding new revenues can only be possible via aggressive divestment or extra borrowing since hiking GST rates or direct taxes will not be politically feasible. Unless the state governments wholeheartedly support the implementation, rolling out NYAY will be a dangerous fiscal gamble.

Second, how will the income profile of the '20 percent bottom' will be decided? The manifesto says, "The target population will be 5 crore families who constitute the poorest 20 percent of all families. They will be the beneficiaries of MISP or NYAY".

But India doesn’t have a proper mechanism to verify the income profile of its citizens especially those in the lower-income groups. Most of this is reported through self-declaration, hence opens up room for fudging of information and corruption at local levels. If the party is relying on 2011 Census data, remember, that data is eight years old and the definition of 20 percent would have vastly changed. That brings the question: how did the 5 crore figure come up in the first place?

Third, at a broader level, the NYAY raises another question. If economic backwardness is the yardstick for an Indian family to get minimum assured income from the government, won’t that work as a disincentive to youngsters to develop their skills and seek jobs at the low-income strata of the society?

The bottom line is this: minus the NYAY, Congress’ 2019 poll manifesto looks impressive. The document is sensitive to major economic issues that the economy faces currently. But, the Rs 72,000 minimum income plan is fraught with major risks — both as an idea and on the implementation front. Gandhi could have avoided this latest version of political populism and focus on constructive policies.

Your guide to the latest election news, analysis, commentary, live updates and schedule for Lok Sabha Elections 2019 on firstpost.com/elections. Follow us on Twitter and Instagram or like our Facebook page for updates from all 543 constituencies for the upcoming general elections.

Updated Date: Apr 02, 2019 18:30:01 IST

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