A former Investment banker, political economist and Chairperson of the Data Analytics Department of the Indian National Congress, Praveen Chakravarty indicates that the Minimum Income Guarantee Scheme for the poor announced by party president Rahul Gandhi has been in the works for quite some time. Careful calculations, he suggests in a chat with Tathagata Bhattacharya, went into it before the announcement was made
What is the Minimum Income Guarantee scheme all about?
It is a progressive income support scheme which at its core has the objective to remonetise the economy. The economy is in shambles, there are no jobs, rural distress is at an all-time high. Farm income has become stagnant. This will infuse cash in the hands of the poor people and will boost consumer demand. The sad fact is that GDP growth as seen has not led to corresponding income growth. This is meant to address that.
Will this be a generic scheme?
Yes, this is not specific. As you know loan waiver schemes deal with agriculture. PDS is about food. Ayushman Bharat is about healthcare. This is about putting money in the hands of people who do not have it.
How will this work? What do you mean by universal?
Let me clarify this scheme is only targeted at the poor. Everybody will get a minimum standard amount. The amount will be decided in the implementation phase. Right now, we are at the manifesto phase.
How are you going to directly transfer the amount? Through Jan Dhan accounts? There has been a lot of criticism of these accounts many of which are said to be benami and idle accounts.
Like I said, these details will be worked out at the implementation phase.
Why do you call it a It is a progressive scheme?
Let me give you an example. Suppose we agree at a sum of Rs 1 lakh per annum as the minimum a family needs.Suppose your income is Rs 50,000. So, you will get the balance amount of Rs 50,000 in a year. Similarly, someone who earns Rs 70,000 will receive Rs 30,000. So, the amount will vary. Yes.
Won’t this have an adverse effect on the economy? Won’t fiscal deficit rise?
We have plans to explore new revenue avenues and rationalise on expenditure. We do not foresee an alarming rise in fiscal deficit.
Would other social sector schemes like the PDS, MNREGA and income support programmes like crop procurement at MSP, setting of minimum wages, etc. continue after the introduction of this scheme?
Like I said, we have to rationalise on expenditure and take a relook at schemes already running.However, I am not saying we will discontinue any of these.
How will families be identified?
Using big data and technology, it is much easier to identify households by income distribution today than it was even five years ago.
Will existing schemes and subsidies be abandoned?
Subsidy and welfare schemes are of various kinds – cash schemes, in-kind schemes, merit subsidies, de-merit subsidies, etc. Clearly, some schemes are working well and some are not meeting the intended objectives. Hence there is a need for rationalisation.
How will it be funded?
It is our belief that the scheme can be adequately funded through a combination of increased revenue (not necessarily higher taxes) and rationalisation of expenditure.