Congress President Rahul Gandhi has promised to establish a minimum income scheme if the Congress comes to power.
Responding to India’s unfortunate employment statistics, the idea of a universal basic income has gained momentum in recent years.
Although he has not specified details, Rahul is the latest politician to announce such a programme. Previously, other political parties had introduced a watered down idea of basic income.
For the 2019 budget, the BJP government said it will introduce a “pro-farmer” programme called Pradhan Mantri Kisan Samman Nidhi (PM-KISAN).
Under this scheme, the government can directly transfer cash up to Rs 6,000 to farmers who hold land up to two hectares.
The recent spotlight on farmer suicides linked to financial troubles has also made politicians question if India needs an income floor or a minimum income guarantee every month.
Minimum income versus basic income
Congress’s minimum income scheme differs from NDA-proposed universal basic income (UBI) one.
BBC explains that a UBI scheme is one where everyone in the country or state is assured a certain amount of income whether they work part-time or full-time. UBI is a non-conditional guarantee—everyone in the country’s workforce is entitled to it.
Congress’s minimum income scheme, on the other hand, means only some, low-income households are eligible for financial support from the government.
The Congress will likely set an income threshold for this scheme—only households earning below that line will qualify for additional support.
In principal, both schemes are for ensuring a better quality of life for citizens. However, the minimum income scheme is reserved for families that are unable to meet the most basic or minimum standard of living.
How will minimum income work in India?
A primary hurdle for a scheme that has qualifiers is to figure out what these will be.
A purely economic standard might be myopic in a country whose population is extremely diverse and has varying degrees of oppression and marginality.
Lawmakers must ascertain whether they will take into account that Schedule Castes and Tribes, Muslims, farmers, and labourers have limited access to income and employment than privileged sections.
Will these demographics be given equitable financial help or will all families below the poverty line be given a standard amount?
In the same vein, families risk being trapped in a cycle of welfare schemes if their overall living conditions are not addressed.
Unless low-income areas are empowered with greater access to employment and education, inter-generational poverty becomes a potential issue even with basic income schemes.
Even if the scheme is to be implemented on purely economic terms, there might be issues.
The ground reality
BBC reports that the percentage of poor in India dropped mostly because the Planning Commission changed the poverty line, not because welfare schemes were working extraordinarily well.
There are also other important indicators of living standards––nutrition, access to healthcare and education, women’s safety, sanitation, and more. Neither the Congress nor the BJP has specified who qualifies for their schemes.
Moreover, different Indian states have different levels of prosperity. Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, and Uttar Pradesh are designated “low-income states” by the World Bank.
For example, if a district in UP has worse sanitation and healthcare than a district in Bihar, will residents of the former be given proportional financial help?
The ruling party must decide if these seven states will be specially prioritised and monitored under the scheme or if all states will be treated equally.
What are the challenges?
From a logistical standpoint, parties must also address how these schemes and cash transfers will be executed.
Rural areas lack vital financial infrastructure, like ATMs and banks. India got 25,000 bank branches and 45,000 ATMs over the last four years.
However, this progress has not kept up with the surge in new customers, especially after demonetisation.
In 2017, Livemint said that 19% of the country did not have banking facilities.
People are further inconvenienced by the lack of literacy, education, and language options that hinder them from obtaining government documents necessary to open bank accounts.
The Financial Express found that even villages with more than 5,000 people have no bank branch or ATM closer than 15 km.
Canada has one ATM for every 545 citizens. But India has one machine for every 5,500 citizens. In 2017, RBI data found that 17% of rural ATMs were servicing 65% of the population.
“Villagers also have to contend with the scarcity of bank branches. Only public sector banks, like State Bank of India, have a sizeable presence in rural areas, but private banks are mostly urban-centric,” said Managing Director of Hitachi Payment Services Loney Antony.
Without vital channels of distribution, such welfare schemes can potentially fail to benefit the very people they are targeting.
Rhea Arora is a Staff Writer at Qrius
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