Congress president Rahul Gandhi's guaranteed monthly income of Rs. 6000 to India's 50 million families appears more vote-catching populist scheme than BJP's promise of pension to elderly farmers and small businessmen.
Rahul plan has quite resemblance to US businessman Andrew Yang's $1,000-a-month universal basic income, Yang is running for the 2020 Democratic nomination for president election.Yang vows to provide every American with a $1,000 ( Rahul $1,038 annually is better than this) guaranteed monthly income. Yang says, the guaranteed monthly income is there in Alaska, for almost 40 years. Everyone in the Alaska state gets between $1,000 and $2,000 a year from oil money," Yang explained. "And because it's oil money, there's no stigma attached, it's not a rich to poor transfer, and it's wildly popular in a conservative state."
Rahul Gandhi would have done better had he extended the guaranteed monthly income to lower middle class that includes farmers and small businessmen, who are deprived of social security and live by their meagre savings. It is estimated that out of 104 million elderly (60+) in India, more than 70 percent are deprived of social security like pension.
Its not difficult to pull up resources for implementing the scheme. Rahul Gandhi's guaranteed monthly income scheme is likely to cost 2 percent of current GDP. According to Congress party's head of data analytics, sustained double-digit nominal GDP expansion will have lowered the program's cost to no more than 1.2 percent to 1.5 percent of GDP. Congress strategists believe that government can recouped some of the cost by taxing increased sales of goods and services and higher corporate profit. It will also need to curb other subsidies and expenditure.
There is an increasing clamour for putting govt subsidies and incentives directly into the pockets of citizens as India is transitioning from being a development state to a compensatory state. As was in the west, the long slide in workers' bargaining power and a decline in their share of national income, have occurred in India too. According to an International Labor Organization working paper, 32 percent of the value added was going to labor as compensation before 1991. Less than 21 percent accrued to shareholders as profit.
However, the situation was reversed after economic liberalization in 90s. Import duties were slashed and license restrictions were relaxed. Resultantly. ,the price of imported machines dropped. Though labour was still cheap, but as globalization gathered pace, Workers became more expensive to to capital goo. ds. This discouraged labor-heavy businesses and encouraged more capital-intensive enterprises. Between 2001 and 2013, labor's share of India's value-added dropped to 23 percent and profit's share zoomed to almost 50 percent.
working class the world over is never comfortable with a shrinking portion of a growing pie. India's economy is producing goods and services for just 100 million better-off people. The remaining billion-plus population is unable to participate meaningfully as either producers or consumers. Over the years this billion plus is getting restless and asserting itself. Now political parties are now being forced to compensate those who were left out.
Its not only Congress party or BJP, even regional parties are now devising new slogans to attract the the billion of Indians still deprived of guaranteed income despite more than seven decades of independence. Not surprising , in the coming days, we can hope for more and more populist slogans.