We are at the cusp of the first phase of voting in Lok Sabha polls 2019. Congress has played it’s trump card for this election, the minimum income guarrantee or NYAY scheme. It is targetted towards the bottom 20% population (5 crore families) and plans to give Rs. 6000 per month to each of such families. This assumes that the average income of such families is Rs. 6000 and this direct transfer will double the income to Rs. 12,000. The Congress party has gave out a vague roadmap for the NYAY scheme. Seems that the scheme will be implemented in phases over the next five years.
There is also ambiguity about how the funding of Rs. 3.6 lakh crore per annum needed for the scheme would be done. The Congress leadership and advisors have tied themselves up in knots explaining this point. Sam Pitroda and the MIT commie economist Abhijit Bannerjee called the middle class selfish and mentioned that Indian tax payers pay too little tax (peak tax rate 30%) and face too little inflation. Pitroda seemed to indicate that the 40% tax rate could make a comeback after 22 years. Realising the damage this could make do with the middle class now making up 50-75 crore people, Rahul Gandhi and Chidambaram tried to give the assurance that no extra taxes will be imposed on the middle class. Either ways the Congress is not clear oh how such an humongous amount of money would be raised per annum, without stopping other welfare subsidies and not raising income tax or GST.
Even if the scheme is implemented, I am not sure if it will be an enabler. The Rs. 6000 per month could be spent on alcohol or on unproductive purposes. Plus there would be a big corruption industry created to certify which families get the benefit under NYAY. Also if Congress were to come to power, I foresee the opposition states not helping with their share of funding for the scheme (scheme envisages centre and state to share the burden). Currently we see that Congress and opposition ruled states are not providing list of beneficiary farmers under PM Kisan to the centre, even though the funding for PM Kisan is to be done entirely by the centre. Hence implementation is very tough and has grave implications for the economy in form on fiscal deficit and hyper inflation.
In comparison the social welfare schemes of the Modi government have been fantastic and they are already in place and exist along with low inflation and the improving fisc. Instead of a Rs. 6000 per month of doles for 20% poor families (or Rs. 12000 per month for 30% families in the future), the Modi government schemes facilitate people in taking casre of basic needs like house, electricity, health, livelihood etc. Here are six social welfare schemes of the Modi government that will do much good for eradicating extreme poverty in this country than any handouts could ever achieve.
- Jan Dhan Yojana: The Jan Dhan Yojana was a serious attempt to remove the disparity between the middle class and the poor in relation to access to banking facility. The Jan Dhan yojana has provided banking facility to 31 crore individuals with zero balance accounts. An amount of Rs. 95,000 crore has been deposited in these accounts. The main advantage has been that government subsidy for various programmes has been deposited directly to these Jan Dhan accounts, that are linked via Aadhar. This killed the whole industry that thrived on leakage of subsidy money. An overdraft facility of Rs. 10,000 for accounts with good records essentially means a small loan of Rs. 10,000 in case of need. Health and accident insurance schemes with premiums as low as 12 and 365 rupees have been provided to the accounts holders. A credit history has been newly created for such account holders and will help them avail loans from banks.
- Prime Minister Awas Yojana: The Prime Minister Awas Yojana has helped a lot of poor and lower middle class families in the rural as well as urban areas to finally get a house of their own. In Indian culture, an owned pucca house still holds a sentimental value. PM Awas yojana aims to provide every family with a house by 2022. This house will have toilet, electricity, cooking gas connection, water supply so that the living standards of poor families are raised. For the urban population, PM Awas Urban offers a interest subsidy of upto 4% on home loan taken in this scheme. This interest subsidy will be paid upfront by the government resulting in reduced effective housing loan (deducting it from the principal loan amount) and Equated Monthly Installment (EMI). For PM Awas Rural variant, the government will provide a subsidy of 1.2 lakh rupees upfront to the beneficiary (1.3 lakh in hilly states and North East). The beneficiary will be provided 90 days employment under MNREGA and Rs. 12,000 for building a toilet. As per the interim budget 2019, 1.53 crore house have been built in the period 2014-18 under the PM Awas Yojana.
- Electricity for All: Modi government has completed the electrification of the approx 18,000 villages that were still unelectrified 71 years post independance. This was the first step as the government definition of electrification was that 10% of the houses in the village needs to be electrified, for the village to be deemed electrified. The Modi government then rolled out the Saubhagya yojana where all willing households will be provided free electricity connection. This was a very important scheme as this would be the real 100% electrification of the country. 99% of all Indian households have been electrified till now. The balance unelectrified 18,734 house holds are in Chhatisgarh (presumably in naxal dominated areas). The next target seems to be 24 hour uninterrupted power supply for all households. Additionally programs like providing subsidised LED bulbs have helped the households and state discoms to save money. My own experience of using only LED bulbs has shown a reduction of 20% in the monthly power bill. Plus an unsubsidized 18W Phillips LED bulb is available below Rs. 300 now.
- Health for all: Health care was one sector that was crumbling in India for many decades, inspite of massive money sunk into healthcare in successive budgets. The poor did get free treatment in government hospitals, but the standards of such hospitals was very poor. The poor were treated with contempt by the government doctors and staff. It was a sin to be poor in India and fall ill. The only options were to go for treatment and get your family below poverty line or wait for death without treatment. Ayushman Bharat is a revolutionary scheme that seeks to change that and is already on the road to become the biggest health care scheme in the world. The scheme currently covers 50 crore poorest Indians as per the Socio Economic Caste Census (SECC) and offers free secondary and tertiary health care including for heart diseases and cancer. The poor can get treatment in the 10,000 empanelled government and private hospitals and government provides coverage of Rs. 5 lakhs per family per annum. The scheme has benefitted 18.7 lakh poor patients at zero cost to them. No wonder the scheme has been praised by the World Health Organization (WHO) and billionaires like Bill Gates. The Prime Minister Jan Aushadi Yojana has created 5100 centres throughout India which provide generic medicines which are 50% to 90% cheaper than branded medicines. The Jan Aushadi yojana has led to savings of Rs. 1000 crore for the common people. Also cost of stents and prosthetic limbs have been reduced to make them affordable for the common citizens. Swach Bharat scheme has led to creation and usage of crores of toilets across urban and rural India. The huge reduction in open defeacation has led to fall in diseases.
- MUDRA Yojana: In a country where a government job is considered as nirvana and the jobs debate is here to stay for a long time, MUDRA yojana has been a disrupive idea. It provided micro loans from Rs. 50,000 up to loans of Rs. 10 lakh and do not require any collateral. These loans free small entreprenuers from the grip of greedy moneylenders. Most of the beneficiaries are women, OBC, Scheduled castes and minorities. This indicates that Pradhan Mantri MUDRA Yojana has helped the caste and class of people who have traditionally been in small businesses. The best thing about MUDRA is that the microfinance companies and NBFCs have been included in it’s ambit along with the PSU and private banks. The microfinance companies work with the poor more than PSU banks and the ppor are more comfortable approaching them for loans. The lenders are safeguarded by government in case of defaults on such loans. The Southern states like Tamil Nadu and Karnataka lead in the number of loans disbursed. About 1.05 crore loans have been disbursed in Maharashtra till March 2018.
- Ujjwala Yojana: The Prime Minister Ujjwala Yojana has been a huge hit across India with about 7.19 crore gas connections provided so far. This has helped many poor women avoid the effort and risk of gathering firewood in jungles, helped them avoid health risks by eliminating smoke while cooking food. The best thing is that the deserving households have got the government subsidy and majority of these households are refilling the LPG cylinders and have not reverted to fire wood. This may seem like a small thing but the implications on women’s safety, health, climate change etc are immense.
In conclusion, the NYAY scheme that promises Rs. 6000 per month in bank account sounds attractive but is not as beneficial and life changing as the above mentioned schemes. Gladly many Indians especially the poor are seeing the big picture and not falling for such doles blindly. It is any day better to have the benefit of Ayushman Bharat yojana to get free treatment up to Rs. 5 lakh annually, than have the Ayshman scheme cancelled to raise resources for NYAY and get Rs. 72,000 amount in account.