How NYAY, a half-baked, rushed idea, will actually harm Congress
This will again make middlemen important.
It's election season — and political parties and leaders are bound to use all possible ways (trick or treat) to woo voters.
In a seeming bid to divert the electorate’s attention from high-profile Congressmen exiting the party and arrest the narrative from the Narendra Modi-Amit Shah juggernaut, Congress president Rahul Gandhi has decided to promise a bonanza for 20% of India’s poor through the Nyuntam Aay Yojana (NYAY). While Rahul Gandhi refused to reveal any further details about NYAY, he accepted that the scheme was still being worked out.
This urgent announcement of what I call a half-baked scheme tells us that this election season will be dominated by a different TRP, apart from Target Rating Point — it’s Timing, Responsiveness (to issues) and Personalities (TRP).
Crisis of credibility
Indian politicians have a long-standing tradition of making grand promises right before elections. The common citizens initially used to believe in these promises and voted for leaders, based on manifestos and pre-election announcements.
However, when those promises were left unfulfilled for decades, the electorate started to incorporate a factor of credibility before handing over five years of their future anymore.
It was thus amusing when the Congress president repeatedly used the phrase ‘final assault on poverty’ to describe his election bonanza.
Here's why.
Indira Lao, Garibi Hatao: In 1971, Indira Gandhi asked India to vote for her if they wanted to get rid of poverty. Unfortunately, as per the World Bank, in 2012, one in five Indians continued to live in abject poverty. ‘Indira Lao, Garibi Hatao’ has clearly remained a mere slogan.
Nationalisation of banks spearheaded by Indira Gandhi was also believed to be yet another ‘assault on poverty’ — in hindsight, it was just another attempt to retain power. Less than 50% of Indians had bank accounts in 2014.
OROP: In its 2004 manifesto, the Congress had promised One Rank One Pension to our armed forces veterans. Unfortunately, it took their ideological opponent to get the ball rolling. In contrast to the meagre allocation of Rs 500 crore by the UPA for OROP in Budget 2014-15, the existing government has disbursed Rs 35,000 crore after the complete implementation of the scheme.
The Food Security Act was reportedly implemented in just 11 states until 2014. Post-2014, the NDA implemented the UPA’s flagship programme across all states and Union Territories of India.
Loan waiver announcement: Unfortunately, the loan waiver announced in 2003 did little to prevent farmers from falling into the grim trap of debt in the future. Its inability to provide any solutions explains that the announcement is just political motivation sans farmer welfare.
In the last few state elections — including Karnataka, Madhya Pradesh, Rajasthan and Chhattisgarh — the Congress performed better at the hustings, but, in reality, there is a crisis of credibility on the ground and a history of reneging on election promises. While farm loan waivers in Karnataka continue to be work in progress, most promises made in the party’s ‘vachan patra', including Rs 10,000 as unemployment allowance for one young member per family for a period of three years, are yet to kick off.
Corruption
We have seen in the past how the poor (who are the target beneficiaries of the proposed scheme) have been manipulated by local officials.
Rahul Gandhi’s NYAY, to my mind, will only reignite the corruption nexus between beneficiary and bureaucrats. Reams of paperwork will be required for enrolment — a dangerous exercise — which will eventually have the potential to take the form of a full-fledged industry complete with bribes and commissions.
- Unlike Ayushman Bharat, which is an entitlement-based scheme, NYAY will be an enrolment-based scheme where family income needs to be ‘declared’.
- I am afraid beneficiaries in the informal sector may be potent targets of the extortion mafia — for example, a domestic worker earns Rs 7,000 a month. She is eligible for an additional Rs 5,000. The local officer may force her to declare her monthly income as Rs 6,000. Subsequently, the additional Rs 1,000 will actually be channelised as ‘commission’. The ability of this scheme to institutionalise corruption simply cannot be under-emphasised.
Rajiv Gandhi’s admission — of every one rupee released by the Centre, only 15 paise manages to reach the beneficiaries — was ‘audacious’, I think, primarily because he chose to do nothing about it. His reluctance to implement administrative reforms also cost him Bofors.
India grew at a foot-dragging pace of 3.5% annually under Indira Gandhi.
With income tax rates at the top level to the tune of 98.75%, providing little incentive for businesses to expand, the nation moved on the back of a black economy, tax evasion and corruption.
Freebies versus subsidies
Last-mile delivery of subsidies has been an enduring challenge. Unlike the previous regime that apparently believed corruption was a ‘necessary evil’ to keep politics afloat, the Narendra Modi-led NDA has used technology and financial inclusion to deal with the perennial leakage of subsidies.
- Implementation of JAM (Jan Dhan-Aadhaar-Mobile) trinity helped the direct transfer of subsidy amount to the bank account of the beneficiaries. As I write, cumulative benefits worth Rs 6.5 lakh crore have been transferred across 440 schemes that pertain to 55 ministries through DBT.
- Moreover, contrary to the loss in transition phenomenon, DBT has reportedly resulted in savings of Rs 1.2 lakh crore. This is clearly more than the amount expected to be disbursed through NYAY.
- The PM Kisan Samman Nidhi Yojana provides small and marginal farmers with an annual transfer of Rs 6,000 in three instalments for the purpose of procurement of raw material.
- Similarly, the Pradhan Mantri Matru Vandana Yojana (PMMVY) provides compensation of Rs 5,000 for wage loss to women post the delivery of their first living child — once again, the purpose, time period and target beneficiary is outlined on a criterion other than just family income.
NYAY, on the contrary, proposes an unconditional transfer of money based on family income. This may lead to a shortage of low-cost labour.
In the past five years, the Indian poor have seen concerted efforts and political will to improve the quality of their life through affordable healthcare (Ayushman Bharat), access to credit (MUDRA), women-led development (Ujjwala), rural electrification and youth empowerment through skill development and Atal Tinkering Labs.
It is unclear how the nation will be able to afford these social security nets — if and ever NYAY were to be implemented.
I am further disappointed that the Congress has once again ignored the importance of fiscal prudence and the adverse impacts associated with an economy rife with fiscal profligacy — including the country’s credit rating.