Part II. NYAY complements PM-KISAN in fighting poverty and inequality

Global thinking has changed with increasing acceptance of income transfer initiatives like NYAY and PM-KISAN to fight poverty and inequality. This part of the series focuses on the UN and India’s fight against hunger and inequality.

 |  6-minute read |   10-04-2019
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(This is the second of a two-part series).

When leaders from 193 countries came together in 2015 to adopt the UN’s Sustainable Development Goals (SDGs), they realised that though the objective of the previous Millennium Development Goals (MDGs) had been achieved well ahead of time — reducing poverty by half from the 1999 level by 2015 — there were still 736 million people living on less than $1.90 a day in 2015 (or Rs 124 at the exchange rate of Rs 65.5 prevailing at the time).

They also realised that “inequality is a roadblock to progress” as it “deprives people of opportunity and subjects many to conditions of extreme poverty”. Therefore, they adopted a new goal, Goal 10: Reduced Inequalities (of 17 in all) — which was missing from the MDG’s eight goals.

But more important than that, they realised ‘growth’ in the traditional sense was simply not enough to eliminate poverty and inequalities.

Its literature on Goal 10 said: “There is growing consensus that economic growth is not sufficient to reduce poverty if it is not inclusive and if it does not involve the three dimensions of sustainable development — economic, social and environmental.”

While the first goal of MDG (“to eradicate extreme poverty and hunger”) had both poverty and hunger clubbed together, the SDGs adopted two separate goals — Goal 1: No Poverty and Goal 2: Zero Hunger — to emphasise the significance of the challenges.

India too realised this long ago. Manmohan Singh, who, as the Finance Minister, brought in liberalisation in 1991 did some course corrections as Prime Minister with legislation like the National Rural Employment Guarantee Act of 2005 (rechristened MGNREGA) and the Forest Rights Act of 2006 to ensure “inclusive growth”.

In one of his speeches (in 2016), Singh said economic growth alone wouldn’t effectively help reduce poverty in the country without explicit policy interventions to create decent jobs, raise incomes of the weaker sections and prioritising investments in infrastructure as well as health and education.

India tops in poverty and inequality

India has made giant strides in reducing poverty. The latest report of the UNDP and Oxford University’s Poverty and Human Development Initiative (OPHI) have developed a new paradigm to measure multidimensional poverty index (MPI) which takes into account multiple deprivations in living conditions, health and education. Their latest report on India says while India reduced MPI poor by 271 million between 2005-06 and 2015-16, there were still 364 million such poor — the maximum in the world and higher in number than the entire US population.

It says four states — Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh — account for 196 million MPI poor or more than half of India’s total poor.

Inequality is another big challenge. Several studies have shown that inequality has grown rapidly after liberalisation. In their 2017 work, Indian Income Inequality, 1922-2015: From British Raj to Billionaire Raj?, French economists Thomas Piketty and Lucas Chancel said India was more unequal than any time since the British Raj — and that this increase happened in the mid-1980s “when pro-business, market deregulation policies were implemented”.

The World Inequality Report of 2018 shows that India has risen to the very top on the inequality graph during 1980-2016, among the US, Canada, Russia, China and Europe. Their 2019 report, Tackling Inequality in India: Is the 2019 election campaign up to the challenge? says this rise in income inequality is unprecedented in recent history and that since 1980, the top 0.1% of earners captured a higher share of total growth than the entire bottom half of the Indian population.

NYAY complements PM-KISAN

India is committed to the UN’s SDGs in removing poverty and inequality by 2030.

Right from the time of independence, there has been a long list of such programmes designed and run by governments irrespective of their political ideologies.

main_farmer-pm-kisan_040919035156.jpgNYAY complements PM-KISAN in fighting poverty and inequality. (Representational image: Reuters)

Some of these are MGNREGA, Deen Dayal Antyodaya Yojana (DAY), National Social Assistance Programme (NSAP), Rashtriya Krishi Vikas Yojana (RKVY), Pradhan Mantri Fasal BimaYojana (PMFBY), Pradhan Mantri Jan Dhan Yojana, Targeted Public Distribution System (TPDS) and Antyodaya Anna Yojana.

More recently, the government of Prime Minister Narendra Modi launched a few such schemes. Prominent among them is the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) — a direct income transfer scheme announced in this year’s budget. It seeks to transfer Rs 6,000 a year to small and marginal farmers for which a provision of Rs 75,000 crore has been made in the 2019-20 budget. About 27.4 million farmers have already received the first instalment of Rs 2,000 in their bank accounts.

The trouble with the PM-KISAN is that it leaves out farm labourers — the poorest of the poor.

As per the Pocket Book of Agricultural Statistics, 2017 they outnumber farmers – 144.3 million farm labourers (or 54.9% of total agriculture workforce) as against 118.8 million cultivators (45.1% of total).

The Aayushman Bharat (AB), a healthcare scheme launched last year, is another such programme meant for the bottom 40% of the population. It provides an insurance cover of Rs 5 lakh a family for which the 2019-20 budget allocated Rs 6,400 crore. This has already benefitted more than 1.7 million poor people.

The Congress’s Nyuntam Aay Yojana (NYAY) — which proposes to transfer Rs 6,000 a month to 20% of the poorest in India — is in keeping with these national and global efforts, at fighting poverty and inequality. It will complement the PM-KISAN in covering the uncovered poorest of the poor farm labourers.

The NYAY is also in keeping with the proposal for a universal basic income (UBI) that the Economic Survey of 2016-17 floated under the current political dispensation — which envisaged an income transfer of Rs 7,620 a year to 75% of the population at a cost of 4.9% of GDP — to establish a just society and ensure a life with dignity for all.

More than 100 countries, including Canada, Finland, the Netherlands, Italy, the UK and the US already have or are running pilot projects for such income transfers because of concerns over growing inequality and threat of automation creating joblessness.

Also read: NYAY I.: It's good economics and in keeping with new global thinking on growth and inequality

Writer

Prasanna Mohanty Prasanna Mohanty @prasannamohanty

Prasanna Mohanty is the Policy Editor, India Today.

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