The main opposition party, Indian National Congress, yesterday (April 02) released its manifesto for the 2019 national elections. One of its key promises is the Nyuntam Aay Yojana (NYAY), a “minimum income guarantee” scheme.
Since last week, when NYAY was first announced, we have seen an energetic debate on welfare policy choices and instruments of governance in India. This has revealed how the public discourse over a welfare agenda remains mired in arguments over the merits and demerits of “doles”—that derogatory word often used to refer to government benefits available to the poorest sections of our society. It is, therefore, crucial to first disabuse ourselves of the notion that welfare policies are essentially wasteful.
In this column, I argue that a “welfare agenda” can go far beyond being a short-term fix for economic distress, and can be a crucial component of taking people towards a life of dignity and justice. Further, delivering welfare effectively requires institutional strengthening, and this is an urgent task before successive Indian governments today.
What is a “welfare agenda”?
A welfare agenda is primarily one that creates an effective social safety net for the poor and the vulnerable to help them to realise their potential, overcoming the constraints posed by their economic and social deprivations.
It is not just about free food grains or grinders—it rests on ensuring equal access to quality healthcare and education and equitable access to economic opportunities. As Pratap Bhanu Mehta, vice-chancellor of Ashoka University based in Sonipat, Haryana, says, “Guaranteeing a minimum sense of economic agency is not a dole. Politically, it is the very basis of the legitimacy of any society.” This is an excellent summary of the moral imperative of pursuing a welfare agenda in India.
Some hold the position that a little bit of state-paternalism is good for the poor, especially those stressed by challenges of sustaining at basic subsistence levels. Household-level research has shown that taking off the burden of making a few critical decisions, by guaranteeing a subsistence income, could lead to significant improvements in the lives of the poor.
It follows that safety nets such as minimum income guarantee or Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which represent state paternalism, allow the poor to realise a partial improvement in the other aspects of their lives, and potentially, enable them to focus on improving their productivity. Contrary to popular belief, there is no evidence that basic minimum cash transfers make the poor lazy or unproductive.
A pragmatic solution
The economic scenario for the vast majority in India is particularly fragile today.
A festering jobs crisis and rural agrarian distress have led to a disastrous situation for a large section of India’s population, as the London School of Economics professor Maitreesh Ghatak and journalist Udayan Mukherjee have pointed out in their excellent round-up of the state of the Indian economy under the current Narendra Modi government.
For a young country, restless with mounting aspirations, the lack of economic opportunities is a ticking time-bomb. The elephant in the room is the agriculture sector, which requires a new paradigm, and one that is nowhere in the horizon irrespective of political hues. Disrupting the agriculture sector at a scale that matters should be the primary challenge of the next decade.
It is clear that structural solutions are needed to fix the economy. However, as some have argued, you don’t start drawing up plans to construct a hospital when a man is haemorrhaging on the road. Given this, we have to look at a mix of short-term and long-term measures, along with the idea that every section of society is entitled to dignity and justice. Here are some ideas for what this could look like:
A question of design: In the past two years, there have been massive shortfalls in government revenue, which, one expects, will take longer to fix. In the immediate term, this implies pressure to trim expenditure, as well as to expand the revenue base. The balance between these two priorities is often largely political. One would hope that the new government will set its mind on expanding the revenue base—higher taxes for the super-rich, wealth taxes, rents from natural resource allocations, etc, before curtailing social spending.
However, some cuts are inevitable, and they should start with schemes that have significant flab. Wasteful subsidies, such as fuel and fertiliser subsidies, are excellent candidates, and opportunities for pruning them should be rigorously examined. Such an examination must also look at the extent to which these cuts would affect a deserving section of the population, and then look at compensatory offers, such as cash transfers to make up for those losses.
The need to focus on implementation: A “minimum income guarantee” proposal is an excellent short-term remedy. The Congress party has also promised to increase public spending on education to 6% of GDP. However, implementing these proposals will be a massive challenge. Starting from issues of targeting or avoiding leakages, or with the institutional architecture that delivers the scheme (as well as continually monitoring performance)—there are many challenges that India’s welfare schemes have faced over the years. The Congress-led United Progressive Alliance (UPA) 2 was often accused of trying to legislate its way out of problems while paying scant attention to implementation. The BJP, on the other hand, has cherry-picked its schemes (toilets, gas cylinders, etc), while wilfully letting others (NREGA, anganwadis, health, etc) languish.
Look beyond schemes, build institutions: Over the past few years, gram panchayats (village councils) have been gradually weakened, even as they have been used by the central government to bypass state governments. At the same time, in the name of direct monitoring from the prime minister’s office, civil servants have taken over the mantle of enforcing selected welfare schemes without following a collaborative process with other stakeholders at the level of districts and below. However, in order to promote a sustainable and effective implementation architecture, it is essential to work on centre-state relationships, and supporting the functioning of district and local government bodies. Empowering citizens and institutions that enhance grassroots representation is a vital step towards equitable delivery.
Beyond politics, the moral imperative
In 2019, Congress president Rahul Gandhi is seen proclaiming that he wants to usher in a welfare agenda to alleviate what he terms are the deleterious effects of Narendra Modi’s “suit-boot ki sarkar” (a government of the suited-and-booted elite) policies. However, we must remember it is always easy to make promises when in the opposition.
When the UPA 2 was in power (2009-2014), they systematically shrunk the budget in real terms for national flagship welfare schemes. States routinely under-spent, and India managed its fiscal deficit by trimming the welfare schemes across the board.
This trend has continued through the tenure of the Modi government, with significant cuts to flagship programmes such as MGNREGA. The welfare agenda, therefore, needs to transcend political divides, and embed itself in our governance fibre. This will not be easy, but for now, it is heartening to see a national party make a staunch commitment to this agenda. For a government that prioritises dignity and justice for its people, designing and implementing an effective welfare agenda is a moral imperative.
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