Few ideas have excited politicians across the ideological aisle as that of a state-funded “basic income" to citizens. Given that the Congress is left-of-centre, Rahul Gandhi’s promise of granting the worst-off one-fifth of Indians ₹6,000 every month, should his party come to power, is no surprise. He expects this “final assault on poverty" to relieve about 50 million households of penury.
The fiscal math of it has been worked out, he claims, but it’s unclear if India can afford the Nyay scheme for minimum income guarantee. With its annual cost placed at ₹3.6 trillion, even if only a single member of every poor family gets the payout, government spending elsewhere would need to be slashed drastically.
If two members of every poor home are paid, the bill would double, exceeding the centre’s entire fiscal deficit for FY19. And since income is a personal thing, all poverty-stricken adults ought to get it.
Globally, an income handout was first proposed as a universal basic income: a small sum for everyone, no questions asked, no confusion over eligibility and no exclusions. Such an idea has its merits. A scheme with riders, however, lets politicians set its terms. The risk: it could end up as yet another political tool.