It's raining sops as battle for votes heats up in India

Modi voters are panicking because his government has an abysmal record made worse by the nutty demonetisation of November 2016.

By Aditya Sinha

Published: Tue 26 Mar 2019, 7:00 PM

Last updated: Tue 26 Mar 2019, 9:32 PM

It is telling that Indian Prime Minister Narendra Modi's supporters were spluttering in rage and hurling invective at Congress party president Rahul Gandhi after the latter on Monday promised to roll out a minimum income scheme guarantee of Rs72,000 a year (approximately $1,050) to the poorest 20 per cent of Indian households. One, Modi's supporters are in a panic. Two, the promise of a Nyuntam Aay Yojana, or Nyay (Minimum Income Programme) promises to change the election narrative from national security, which took centre stage following the February 14 Pulawama attack, back to the reliably populist roti, kapada aur makaan (food, clothing and shelter). Three, the idea of a universal basic income (UBI) is gathering steam worldwide and its time may come sooner than ruling elites think.
Modi voters are panicking because his government has an abysmal record made worse by the nutty demonetisation of November 2016. There is nation-wide rural distress. There are no jobs for a workforce that swells by a million people each month. India is still a predominantly agrarian country so this is a problem for Modi - the loss of three states in December woke him and Bharatiya Janata Party (BJP) president Amit Shah to the fact that they could be in trouble.
There was a sigh of relief after the Pulwama attack and its associated airstrikes: both Modi and Shah got right down to campaigning on their  chowkidaari (gatekeeping) and how only they could keep the nation safe. (In contrast, Congress general secretary Priyanka Gandhi cancelled her first press conference scheduled on February 14.) Across the Hindi heartland that will make or break Modi's prospects for returning, journalists have relayed anecdotal evidence of Modi's continuing personal popularity even if it is at the cost of his party, and even if Rahul is taken more seriously nowadays (many citizens seem to appreciate a credible opposition).
Yet, it is the election schedule - widely believed to have been protracted over two months to help Modi, the BJP's sole campaigner since he himself has reduced the rest to ciphers - which has caused national security as an issue to peak early. The narrative's return to economic mismanagement is now more probable.
On Monday night the BJP's supporters were at their most aggressive. While some reasonably wondered where the money for Nyay would come from - it comes to Rs3.6 trillion a year ($52 billion) - and others wondered why a country with a GDP per capita income of approximately Rs133,730 would need a Rs72,000 minimum income guarantee, the crowd resorted to name-calling and urging Rahul to return to Italy (though he was born in India and studied in the US) along with nastier suggestions.
Someone even accused Rahul of plagiarising Nyay from US presidential candidate Andrew Yang, who promises a UBI of $1,000 a month for every adult under "The Freedom Dividend". Yang says there are 40 million Americans below the poverty line, and claims a UBI would grow his economy at 12 to 13 per cent and increase the labour force by about four and a half million. He says it is necessary since a third of American workers will lose their jobs by 2030 due to automation and other artificial intelligence.
UBI is gaining ground as an idea, and some see it as an outcome of the anti-elite anger (following the 2008 recession) which is driving nationalist-populism around the world. Nyay, however, is different from UBI. Modi supporters conveniently forget that former chief economic advisor Arvind Subramanian had in the 2016-2017 Economic Survey recommended a UBI of Rs7,620 per year. And Modi himself announced Rs6,000 per year for the poorest farmers, an announcement that now looks like it was too little (Nyay promises Rs6,000 per month) and which, like national security, peaked too early.
Income inequality has grown since the economy's liberalisation - the top one per cent of Indians own more than 20 per cent of the national income. With a high GDP per capita, India can easily afford a bit of redistribution that would help drive economic growth into double digits, a necessary precondition for sufficient job creation.
Apropos the cost to the exchequer, India already spends five per cent of its GDP in subsidies. Nyay would only cost 1.3 per cent of the GDP. Other subsidies could easily go - be it the Rural Employment Guarantee Act of Rs60,000 crore a year, Rs1.84 trillion for food subsidies, Rs750 billion for fertiliser subsidies, etc. The next government, whatever its composition, has no excuse to not implement a minimum income guarantee.
As for the current election that had so far been looking listless, things have got interesting, thanks to this gauntlet thrown down by Rahul Gandhi. Nyay is certainly more credible than the Rs1.5 million that Modi had promised each voter back in 2014, and that none of his supporters seem to remember anymore. The ball is now back in Mr Modi's court.
Aditya Sinha is a senior journalist based in India, and author, most recently, of 'India Unmade: How the Modi government broke the economy'

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