Congress president Rahul Gandhi’s promise of a minimum universal basic income for the poor is likely to trigger another epidemic of populist announcements. Not that our politicians need any trigger to indulge in competitive populism, but still an irresponsible statement by him will surely expedite and intensify the process. As it is, the Narendra Modi is said to be working on some major, revenue-guzzling package to help the poor, especially in the countryside.
Speaking at the Kisaan Abhaar Sammelan in Chhattisgarh’s Raipur, Rahul Gandhi said, “The Congress has decided to take a historic decision... The Congress-led government is going to give Minimum Income Guarantee. This means each poor person in India will have a minimum income. This means there will be no hungry, poor people in India.”
In a series of tweets, he said, “We cannot build a new India while millions of our brothers & sisters suffer the scourge of poverty.” “If voted to power in 2019, the Congress is committed to a Minimum Income Guarantee for every poor person, to help eradicate poverty & hunger. This is our vision & our promise.”
Something similar, a universal basic income (UBI), was moot by for chief economic adviser Arvind Subramanian a few years ago. While the UBI was proposed for everybody regardless of their economic status (for sake of easy implementation), the Minimum Income Guarantee (MIG) is expected to target the poor only.
The MIG that the Congress president has promised is a deeply flawed idea. First, it is no morally repugnant: the poor are not and should not be treated as beggars. They, like most other people, want the environment to be conducive for wealth creation so that they could participate in it.
Second, the pledge, if redeemed, would stress public finance, which is already under pressure and the government is accused of fudging the Budget numbers.
Third, this will give rise to more demands from not just the poor but also not-so-poor.
Finally, as we mentioned earlier, the MIG can stimulate rival politicians to promise even more deleterious schemes that would bleed the exchequer and further burden the taxpayer. When the Bharatiya Janata Party, in the run-up to the Assembly polls in Uttar Pradesh, announced farm loan waivers, it didn’t end with UP; other states, under the BJP as well as the Congress, followed suit. The result: about Rs 1 lakh crore have gone down the drain, and farmers are still unhappy and angry.
Unfortunately, it is unlikely that Rahul Gandhi would rethink over the MIG. The name is reminiscent of Indian Air Force’s fighter aircraft MIG series. The aircraft were intended to hit the enemy. MIG-2019, however, will hit the Indian economy.