Arun Bairwa and Rajesh Barik
he Congress party president Rahul Gandhi has announced a new scheme of Minimum Income Guarantee (MIG) for the poorest 25 crore Indians who are most vulnerable in economic terms. The Congress has made this scheme a part of its manifesto and announced that each poor family whose household income is less than Rs 12,000 per month will get an annual transfer of Rs 72,000 (Rs 6,000 per month), which will cost the exchequer a sum of Rs 3.6 lakh crore per annum. This heavy amount is expected to be 1.9% of India’s total GDP.
The basic feature of this programme is similar to MNREGA which also targets poverty alleviation, but through employment generation and not by direct money transfer. Here, the process of direct money transfer to poor people’s bank accounts to alleviate poverty has created many confusions and queries. While many scholars have questioned the identification of poor and proper implementation of this programme, the Congress is confident with its execution, and aims to implement it in multiple phases. The fundamental question of this programme is how will the government identify the poor? It is because in India poverty is always estimated on the consumption expenditure of the households. As the Indian labour market is more diverse in nature and have multiple channels of income, so it is always difficult to estimate poverty on income basis. Moreover, in the informal sector, the casual labour does not get employment everyday and their wage fluctuates very frequently, sometimes within weeks and months. In such cases, a person may be poor in this week/month may not came under poor category in the next week/month or the situation can be vice-versa. Hence, determining 20% of poor on income basis is not only difficult, but also time consuming and administratively expensive.
Secondly, even if the government is able to identify the poor and provides them with Rs 6,000 per month, will this money be able to meet its basic goals? This is because in the developing countries like India, the people often face the challenges of multidimensional poverty rather than simple income poverty. Here, the Multidimensional Poverty Index (MPI) defines poverty as the deprivation of consumption and other basic economic resources among the people. The beauty of measuring multidimensional poverty is that it takes into account other dimensions of poverty (such as deprivation of health, education, electricity, drinking water, sanitation etc.) compared to the conventional methodology of measuring poverty based only on income or monetary deprivation. Hence, will this MIG scheme be able to fulfil other dimensions of poverty or it will just raise the income standard of the poor people?
On the contrary, it can be argued that the provision of direct cash transfer through MIG will assist the poor to smooth their consumption expenditure and enhance their capability by investing in other non-income generating activities such as health, education, sanitation, and other basic entitlements. But it is still questionable whether the poor people will be able to convert that money into welfare activities necessary for them? It is often observed that poor and illiterate people do not know how to invest the obtained money for their capability expansion (i.e. investing on food, education and health).
As a remedy of this complexity, instead of spending such a massive amount of money with uncertain results (which may create the problem of fiscal deficit), the government can meet the true essence of multidimensional poverty through heavy public expenditure to ensure universal basic entailments (i.e. nutritious food, clean and safe drinking water, basic sanitation, electricity, cooking fuel etc.), spending on quality health and education, ensuring regular jobs and pensions to the elderly and disabled persons. Otherwise, if the government only ensures minimum income through direct money transfer, it may slightly increase the standard of living but it may not deal with the other dimensions of poverty.