Minimum income guarantee: Populism versus long-term policy for a vibrant job market

New Delhi, Delhi, IndiaWritten By: Lalit ShastriUpdated: Jan 30, 2019, 12:27 PM IST
main img

Congress president Rahul Gandhi recently announced that his party would implement a minimum income guarantee scheme for every poor if his party comes to power at the Centre. Photograph:(PTI)

Story highlights

Before the elections, the Congress, through the sop of "minimum income guarantee", has tried to address that section of the Indian population which is suffering the most due to joblessness and poverty.

The Hugo Chavez model of politics pivoting around the concept of neopatrimonialism was followed with determined zeal by the previous Manmohan Singh-led UPA government at the Centre, presided over by the then Congress party president Sonia Gandhi.

The drawback of the model that was carved and implemented to the hilt by Venezuelan President Hugo Chavez between 2002 and 2013, a period that almost coincided with the Manmohan Singh's rule in India, was more tuned to addressing social inequalities rather than structural inequalities.

The present job crisis in India can be attributed and described as a direct fallout of the politics of populism practiced by the Congress party when it was in power between 2004 and 2014 since equity distribution was lopsided and the growth on economic infrastructure front also was compromised with maximum focus on direct cash transfer to the deprived sections through acts passed by the Indian Parliament to guarantee jobs, food, and education. While doing this, they typically aped the cash transfer policy that was being followed in Brazil and Mexico without bothering about the impact it would leave on the middle class wage earners and the economic growth of the country.

Following on the same footsteps, present Congress president Rahul Gandhi announced at a "Kisan Abhaar Sammelan" at Raipur this Monday that his party would implement a minimum income guarantee scheme for every poor if his party comes to power at the Centre this year.

Former finance minister P Chidambaram has laced the Congress decision regarding "minimum income guarantee" with the assertion that it would "wipe out poverty" and uplift about one-fifth of India's population that lacks the purchasing power to provide itself food, clothing and shelter.

Chidambaram has defended the decision by pointing out that India owes itself the responsibility of mobilising resources to rescue the deprived sections caught in the trap of poverty. For this purpose only 1.5 per cent of the GDP would be required and there should be no difficulty in meeting the target, he adds.

Before the nation goes to polls, the Congress party, through the sop of "minimum income guarantee", has tried to address that section of the Indian population which is suffering the most due to joblessness and poverty. According to basic estimates their number is huge - about 200 million. Obviously, the Congress party would like to use them as a vote bank in the coming parliamentary election.

Scarcity of jobs is a burning problem that is haunting the NDA government led by Narendra Modi at the Centre in a big way as its five year term is nearing completion.

Joblessness in India is an issue that has caught the attention of analysts in neighbouring China. Global Times, published under China's official People's Daily, also points to growing discontent, being faced by Prime Minister Modi. Hu Weijia, a reporter with the Global Times says: "If New Delhi restricts Chinese investment, the move will unavoidably cut job opportunities for young people (In India)."

Asian Infrastructure Investment Bank (AIIB) also has expressed concerns about financing and the lending environment in India "due to the collapse of Indian infrastructure development and high rate of non-performing assets among Indian banks" in its inaugural Asian Infrastructure Finance report released in Beijing on Tuesday.

The AIIB report talks of the downward trajectory when it comes to India's infrastructure transaction activity in terms of total completed and ongoing transactions each year from 2014 to 2016.

Economists and analysts of the long-term South Asian scenario, especially in the backdrop of the China-US trade disputes that have got aggravated by the US President Donald Trump's decision to impose tariffs on Chinese imports, have started talking of the advantages of Chinese companies investing in India's labour intensive industries. The Global Times has underscored that the Modi administration needs good news in terms of job growth ahead of the upcoming general election.

The projection by commentators exploring the prospects of mutual gain by both India and China under the current global scenario notwithstanding, what cannot be ignored is that the clock is ticking for Modi. Come elections and the top bulb of the sandglass will soon be empty.

Instead of populism, it is important at this juncture to address the issue of highly unequal levels of development, human development index and lopsided distribution of equity. Seeking investments and channelising resources for the purpose of building the economic infrastructure, so essential for improving the quality of life of the people across the board, should be the priority. Ahead of elections, the Modi government will have to take the Congress head on. Without wasting time, it will have to place on the table a policy design for evolving and creating a vibrant job market in India.

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)