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Indian Elections: Rahul Gandhi’s Minimum Income Program Highlights Modi Government Failures

April 9, 2019

"It's bringing policy attention and public attention back to the issue of poverty, to the issues of deprivation and the fact that this government has not delivered at all for the bottom 50 percent, much less the bottom 20 percent" says Economist Jayati Ghosh

"It's bringing policy attention and public attention back to the issue of poverty, to the issues of deprivation and the fact that this government has not delivered at all for the bottom 50 percent, much less the bottom 20 percent" says Economist Jayati Ghosh


Indian Elections: Raul Gandhi's Minimum Income Program Highlights Modi Government Failures

Story Transcript

SHARMINI PERIES: It’s The Real News Network. I’m Sharmini Peries, coming to you from Baltimore.

Leading up to the national elections on May 19 in India, the opposition Congress Party made an intriguing promise to unseat incumbent, Prime Minister Narendra Modi of the BJP party. Now, Congress Party, headed by Rahul Gandhi, promised:

So this program, which the party calls NYAY, meaning justice, will guarantee the equivalent of 1,045 dollars per family per year. Some 50 million poorest families could benefit from this, says Congress. This program is not a basic income program, but rather a minimum income program common in many welfare states in which the benefit is only given to families whose income is under or below the guaranteed minimum, bringing them up to a certain level, but not above it. Now, Rahul Gandhi added that he believes the program will eradicate poverty in India, a tall order.

So today we are going to take up that question with our guest, economist Jayati Ghosh. She’s a Professor of Economics at JNU in New Delhi, and today she joins us from Chennai. Jayati, good to have you with us.

JAYATI GHOSH: Hi, it’s good to be here.

SHARMINI PERIES: All right, Jayati, a heated political election underway. And this program that Rahul Gandhi is announcing is certainly a clever campaign promise, and the right wing is already calling this proposal a populist move which he will not be able to deliver on because it will require printing money, devaluing the rupee, and making the guarantee of 72,000 rupees almost meaningless if they have to devalue the currency and so forth. So what is your take on all of this?

JAYATI GHOSH: Well, the right wing criticisms are really not well-founded. They are making various claims which are not really all that valid, like it’s not affordable and things like that. I think it’s a very clever move because it’s bringing policy attention and public attention back to the issue of poverty, to the issues of deprivation, and the fact that this government has not delivered at all for the bottom 50 percent, much less the bottom 20 percent. So it’s good from that point of view, it’s actually bringing back attention to the many failures of the Modi government in terms of the conditions of people. But in practical terms, it is going to be very difficult to implement, there’s no doubt, mainly for two reasons. One is the identification of beneficiaries, and the other is whether you’re going to actually cut other spending to meet this requirement or you’re going to raise taxes.

So far, the Congress party has not said anything about raising taxes, tax revenues, which is something that can be done, because the amount that is being suggested, it comes to about 2 percent of GDP. It’s not such a very large amount. But the identification of beneficiaries is a much bigger problem. We don’t have income data. The last survey we did in India was in 2011-12, which is a very long time ago. And that didn’t really look at incomes, that identified the poor through various multi-dimensional measures of poverty. Now, if we’re trying to identify the on the basis of the bottom 20 percent, it really means you have to calculate everybody’s incomes. How do you decide which is the bottom 1/5? And then, there is all these problems once you do targeting. There are these big problems of unjustified exclusion or unwarranted inclusion, and these can create tremendous social resentment, which is in fact, in a society that is already socially extremely stratified and riven, this can create all kinds of other problems.

So we have been suggesting, some of us, that political parties in the opposition should really be thinking of a different scheme that would ensure minimum incomes. And this is a combination of good quality, universal basic services, universal right to work in both rural and urban areas, and universal pensions for those who can’t work. This is something that we have actually looked at, we’ve done the calculations about how much it will cost, and we feel it is that something doable. It would cost around six percent of GDP, that’s quite a lot, but it would generate more output and goods and services that improve the quality of life, it would have very significant positive multiplier effect that would generate more economic activity and employment, and employment is a huge concern in India today, and that increase in income and activity would also lead to increased tax revenues for the government.

So in fact, it would cost only around for four, four a half percent of GDP. And this amount you can make easily by simply getting rid of all the exemptions that the government provides. Every budget is about six percent of GDP that they provide as exemptions. So just cut those by half, you get three percent. Introduce a wealth tax and an inheritance tax, you can get another one percent. You could actually fund this. And in an economy where we have a huge unemployment problem, where we have massive inequality, and we have massive uncertainties and poverty, it’s very important to provide that kind of security, which you will get through proper health and education services and through a right to work in urban and rural areas.

SHARMINI PERIES: Now, in terms of the Congress’ proposal on the table, it is a popular move. I mean, people want a simple message that there will be such a guarantee. The practicality of implementing it, as you suggest, Jayati, can be negotiated. The programs and the services and the benefits of what you’re proposing is very clear. Now, the possibility of Congress winning this election is greater only if it is in combination with some sort of a coalition that could be formed. And what are the chances of that happening?

JAYATI GHOSH: Well, I think the chances are not zero at all. In fact, the chances were very good until this attack happened in Pulwama in Kashmir on a convoy of an army that was going and where 40 soldiers were killed. And then, the government claimed it had done an airstrike in Balakot, which apparently hit some Pakistani targets. We don’t have much information on that, and there’s no independent verification that this occurred, but this has actually generated a surge of nationalist sentiment. And the Modi the regime is basically hoping that it can ride on this nationalism and somehow win, claiming that it is the only party that actually cares about national security, which is completely wrong.

In fact, today the Prime Minister made an announcement about bringing down a satellite. It’s something that he should not be doing with the model code of conduct before the elections, and it’s something normally that the relevant Defense Agency announces. But he chose to announce it himself to emphasize that he has all this national security enthusiasm. We don’t know whether this will be adequate. There is a lot of disaffection among people, there is a lot of division. And in some states, some very important states like Uttar Pradesh, the opposition has come together. And so, there is hope that they would actually at least cut the BJP seats enough to prevent them from getting a majority on their own.

After that, what happens is really not clear. Because the BJP is also now much, much richer than all the other parties put together. It introduced a very terrible scheme of electoral bonds which allowed companies and even foreigners to pay in money in a very completely opaque fashion, and 95 percent of these electoral bonds were bought for the BJP. So they have cornered all this money. And once the elections are over, they probably will try and buy up and MPs and buy up politicians and somehow cobble together a government. We don’t really know yet. We are hoping that the Indian electorate has better sense and that actually the extremes that this government has brought the country, the extremes of hatred, of inequality, and of just perversion, that these extremes will not be tolerated by the Indian electorate.

SHARMINI PERIES: All right, Jayati. Now, the terrorist attack, as you mentioned earlier, and this hype of anti-Pakistan, anti-Muslim sentiments in this country, India has gone through this. People should be clearly seeing through these tactics of the BJP government. The question is, are they?

JAYATI GHOSH: It’s very hard to say. And it’s also hard to say because increasingly, people are scared of speaking their minds because they get attacked in many ways, they get trolled on social media, sometimes they even are suspended from their jobs. I mean, all kinds of terrible things are happening to those who dare to dissent or to even express their real feelings. So it’s not very clear how many people actually feel this way, but there is a lot of resentment on the ground. You can experience that even when you’re just talking on the road to people.

SHARMINI PERIES: And finally, Jayati, what are the polls saying about the May 19 elections?

JAYATI GHOSH: They change a lot, and they also vary depending on which political group that polling agency is representing. So at the moment, it looks like it will be a hung parliament with no party getting a clear majority. But then the question is which party is more likely to cobble together a majority. And unfortunately, it looks like the BJP has a bit of an upper hand there.

SHARMINI PERIES: All right. Jayati, I thank you so much for joining us today. And we will keep a tab on the elections in India, and I hope you can join us again. Thank you very much for today.

JAYATI GHOSH: Thank you, bye bye.

SHARMINI PERIES: And thank you for joining us here on The Real News Network.