How to ensure basic minimum income for the poor in post-Covid India
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Opinion : In a joint opinion piece, C Rangarajan (former chairman, Economic Advisory Council to the Prime Minister and former Governor, RBI) and S Mahendra Dev (director and vice-chancellor, IGIDR, Mumbai) look at different schemes through which the government can provide minimum income support to the weak and vulnerable groups in the post-Covid period.
- The first port of call in this regard is the idea of cash transfers. In the past, there has been considerable discussion on universal basic income (UBI). The authors state that while UBI is easy to implement yet “feasibility is the critical question”.
- The Congress party had suggested NYAY to help the poor. But “the problem with non-universal targeted programmes is the problem of identification. Narrowly targeted programmes will run into complex problems of identification and give rise to exclusion and inclusion errors,” they state.
MGNREGA and like programme for Urban areas
- The second and third approaches are expanding MGNREGA in rural areas and introducing an employment guarantee programme in urban areas, respectively.
- “At present, MGNREGA is availed of only for 50 days of employment, although the Act guarantees 100 days of employment. One way to help the poor and informal workers is to strengthen it.”
- Apart from expanding MGNREGA, the writers propose “a nation-wide urban employment guarantee scheme to improve livelihoods”.
- “The design can be slightly different from MGNREGA. In urban areas, employment can be provided to both unskilled and semi-skilled workers as there is demand for the latter workers also,” they write.
- According to their calculations, “the total cost of the three proposals would be Rs 4.9 lakh crores or 2.4 per cent of GDP. A person working in MGNREGA and in the urban programme can get Rs 30,000 if 150 days are provided”.
- They further suggest that given that raising this additional money is not easy, “perhaps, out of the Rs 4.2 lakh crore which is needed, Rs 1 lakh crore can come out of phasing out of some of the expenditures, while another Rs 3 lakh crore must come out of raising additional revenue. Some of the non-merit subsidies, another item of expenditure, can be eliminated,” they argue.