Rahul Gandhi’s income guarantee may do more harm than good, says ex-Sonia Gandhi advisor

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Updated: February 15, 2019 11:55:41 AM

Rahul Gandhi’s proposed minimum income guarantee scheme will do more harm than good if it comes at the cost of existing subsidies for the poor, says Harsh Mander, a member of Sonia Gandhi’s erstwhile National Advisory Council to Prime Minister Manmohan Singh.

With the Congress President Rahul Gandhi announcing to introduce a minimum income guarantee scheme in 2019, if voted to power, talks about the effectiveness of such direct income transfer scheme has again gained momentum.
“Rahul Gandhi’s proposed scheme will do more harm than good if it comes at the cost of existing subsidies for the poor,” says Harsh Mander, a member of Sonia Gandhi’s erstwhile National Advisory Council to then Prime Minister Manmohan Singh.

This income transfer will target the poor with a minimum income of Rs 1,000 to Rs 1,800 a month, Harsh Mander, a social activist, wrote in The Indian Express. The proposed scheme is based on the acknowledgement that massive market-led economic growth, by itself, cannot raise millions out of poverty, but needs a sensitively-designed direct state support to the downtrodden, he wrote.

He however, raised some basic questions such as how these households will be identified, how the required resources will be raised, and what other elements of social protection, if any, would together with income-transfers would be used to eradicate poverty.

Warning about the huge exclusion error these scheme are prone to, he said that there are no objective ways of evaluating incomes of households in the informal sector. Moreover, these targeted scheme give far too much discretion to the bureaucracy, leading to enormous rent-seeking.

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He disapprovd the reports suggesting that the funds required for such transfers should be re-appropriated from those spent on food subsidies and other programmes. Believing that food transfers are better than cash transfer, he said that any such move would not reduce hunger, but will only aggravate it. The cash transfers also are inflationary in ways that food transfers are not, he added.

Income transfers to the poor can work only if these augment, not substitute, the existing support to the poor, said Harsh Mander. He rather suggested to rationalise subsidies given to the middle class and taxing super rich.

He recommended to design income transfer schemes to farmers like that of Telangana and Odisha government, and expanding the Mahatma Gandhi National Employment Guarantee Scheme to a massive housing, water and sanitation programme for the urban poor.

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