Is the electorate mature enough to see through the short-term benefits of doles?

 

Will the proposed Nyuntam Aay Yojana (NYAY), the subject of both consternation and heated discussion, be a game-changer for the Congress? Rahul Gandhi likes to think so. He calls the Rs 72,000 per annum dole for an estimated 25 crore poor people (five crore families), who earn Rs 12,000 or less a month, “a surgical strike on poverty”. He says, with his usual disregard for facts, and a pitch at being a Robin Hood figure in a Gandhi cap, that if the Narendra Modi government gives away money to the rich, the Congress would do so to the poor. That there is little hope of Congress coming back to power on its own in 2019 is another little factoid he chooses to ignore. But for the moment, he thinks he has found the magic bullet.

Gandhi says Congress will implement the fiscal mathematics busting scheme if it “comes to power”. He says Congress has consulted leading economists. Celebrity economists Angus Deaton and Thomas Piketty are mentioned and Raghuram Rajan too. Rajan has gone on record saying that NYAY is fiscally imprudent and very hard to implement, but also that space should be made for such schemes. Nobel Laureate Amartya Sen’s poverty alleviation economics may also have been an influence on the contours of NYAY.

But as timings of announcements go, is what is good for the goose also good for the gander? If not, then how is this highly politicised announcement, with its eye firmly on swaying the voter, not a violation of the code of conduct?

At the same time, the Congress has been complaining to the Election Commission (EC) about the release of the Narendra Modi biopic and the Tashkent files soon after, the latter being a film on the rumoured Congress conspiracy to murder Prime Minister Lal Bahadur Shastri and clear the path for Indira Gandhi. The movies, slated to be released in the first half of April, even as some places go to the polls on 11 April, are said, by Congress, to be an attempt to influence the electorate through the election season up to May.

The Niti Aayog Vice-Chairman Rajiv Kumar has been quick to sharply criticise both the content and the timing of NYAY. And it has promptly earned him a notice for an explanation of his comments from the EC.

But the competitive welfarism with an eye to the 2019 general elections has not begun with NYAY. The Modi government’s humungous universal health insurance programme, Ayushman Bharat-National Health Protection Scheme (AB-NHPS) announced on 15 August 2018, covers about 50 crore people, from the poorest of the poor. This scheme, with a government funded insurance cover of Rs 5 lakh on a floater basis per family, for hospitalisation and secondary and tertiary care, has already benefited millions.

The Modi government has, in recent times, also unveiled a universal pension plan for informal sector workers—the Pradhan Mantri Shram Yogi Maandhan (PMSYM) that will, over the next five years, embrace some 10 crore people. And then there is the PM-Kisan Scheme, with a cash dole of Rs 6,000 per annum paid in three tranches, helping an estimated 12 crore small farmers with land holdings of 2 acres or less. The first tranche of Rs 2,000 each, costing the exchequer Rs 75,000 crore, has already been paid into the bank accounts of the small and marginal farmers.

Will Rahul Gandhi’s brand new attempt at mega populism put Narendra Modi’s modest dole in the shade? Early reports show cautious anticipation of the proposed freebie along with scepticism in equal measure. The Congress promises of small farmer farm loan waivers have virtually not been implemented in the states it has recently won.

And then there is a clamour of questions. Is this a full dose scheme of Rs 72,000 for all the eligible as some Congress people have said, or a top-up based on the sliding scale of actual earnings that Rahul Gandhi has announced? How will earnings in cash be verified? How will the data on applications and qualifiers be handled? How much inefficiency and middle-man corruption are we going to see? Will NYAY cannibalise the federal allocations for other programmes? Will it flounder on the shores of various states, reluctant to pony up their share, just as it has happened with Modi’s health insurance scheme in West Bengal and other states? Will it become a bone of contention at all, because a UPA win and government formation in May 2019 is far from certain?

It will cost at least 2% of GDP, almost a fifth of India’s tax collections at present, or 13% of the Union Budget, some Rs 3.6 lakh crore. Consider that the defence budget is at 11% of the Union Budget now, though many purchases of equipment and weaponry are being paid for outside the annual budget allocations.

Congress has been busy reimagining itself as the main contender despite several headwinds. Its position and acceptability as leader within a future winning UPA line-up is uncertain. Will it better its 2014 tally and if so by how much? And even if it is the single largest component of the UPA, Rahul Gandhi himself may have to settle for a back-seat for the sake of cohesion. How many of his partners, let alone those in the NDA will be willing to implement NYAY after the elections? But it appears that the main purpose of NYAY is to win the elections, rather than worry about its implementation.

Modi’s welfare and poverty alleviation schemes, including many started by the UPA, have taken care not to impact the deficits or inflation adversely. More money has also been poured into long-standing schemes like MNREGA in successive Union Budgets over the last five years and yet, inflation has more than halved. The fiscal deficit has been lowered from 5.1% to 3.4%, and was headed towards 3.2% if it wasn’t for the recent farmer dole announced in the Interim Union Budget of February 2019.

Congress, on the other hand, is banking on future growth in the economy to cushion the impact of NYAY. It ignores the inflationary effect of minimum universal incomes seen in other countries, and the economists that would argue doles are unproductive expenditure.

The broader picture of a socialist hangover made up of subsidies and grants is a historical legacy that is very hard to shake off. This even though it could destroy the economic health of the country and ruin its international ratings in a global environment. And yet, with a huge and ever growing population of over 1.3 billion, poverty alleviation in all its forms must be a major goal of any ruling dispensation. Besides, the electorate has grown used to the government and opposition wooing it with benefits.

There is a case however to achieve a balance between economic imperatives and populism. The Modi government has done this admirably, but the Congress has traditionally worried less about the effects of its largesse. Is the electorate mature enough to see through the short-term benefits of doles which are invariably inadequate as contrasted with emphasis on growth and development?

Past experience would suggest otherwise, but the country has a new demographic of young, aspirational people. Will they be able to outweigh the appetite for benefits from the poor? Did they vote for Modi in 2014 because of his promised benefits or his vision for vikas? Does the majority that supports him as Prime Minister today do so because they expect him to accelerate development?

It certainly appears so, with considerations of national security also playing an important part, particularly when contrasted with the weak showing of the various other leaders in the Opposition. Even then, it is clear neither side is taking any chances on its competitive welfarism.

It is advantage Modi as the incumbent Prime Minister, who is seen as tireless and honest. As someone who has curbed corruption and delivered in good measure on several of his promises.

Rahul Gandhi, on the other hand, has absolutely no track record in governance. Nevertheless, Congress has ruled this country for decades in the name of the poor, with indifferent results on their uplift. For a scion of the grand old party not to use the allure of this tried and tested formula on voters would be unlikely.

The question is, has the country decided it wants much more than a modest handout promised at election time?

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