Every general election since 1977 , says Aaron Purie, is a pirouette on a major theme. If 1980 waltzed around TINA (there is no alternative ), 2014 was awhirl to TIMO (there is Modi only). His pick for 2019 -AOTM (anyone other than Modi) or TATA (there’s a third alternative). However, if Congress’s sales pitch for NYAY finds traction with voters it may well be NORA ( Nyay Over Rashtravadi Anyay).
Most sceptics denigrate NYAY as a gross abuse of economic wisdom. And their principal arguments- its impact will be inflationary and that its recipients may be liable to abandon work to live off it, both fallacious.
As the economy faces a deepening demand dormancy direct cash transfers like NYAY seem the only way out to boost propensities to consume, rekindling growth that presently smoulders at a newly discovered ‘Hindu rate’ of 7% . As sufficient leeway in terms of under-utilised capacities exist, NYAY will be mildly and beneficently inflationary. If no surer ways can be found to kick employment to a higher trajectory, Keynes advised - ‘government should pay people to dig holes in the ground and then fill them up’. And that is canonical economic wisdom.
Further, under leapfrogging digital and technological innovations free market dispensations are neither creating jobs commensurate with manpower growth nor equitably distributing wealth. Joblessness and inequality are disrupting age old social solidarities in the midst of remarkable economic growth in western economies , maladies that have already crossed our shores too. That incomes from upsurge in economic activity ultimately trickle down to the poor is now a proven myth, Oxfam reports and Piketty’s outstanding research on growth and inequality bear eloquent testimony to it. The massive investments promised in BJP’s manifesto may generate growth but the hopes of the poor for higher real incomes would be about as realisable as the khichdi in Birbal’s handi hanging high up on the tree to cook from the fire on the ground below. It will take long ,lifelong.
Is there a moral hazard in direct cash transfers to the poor presumably from ‘evaporation’ of the incentive to work ? Cassandras of doom go as far as to conclude that unearned money in the hands of the poor will induce them to ape unaffordable ways of the rich, indulge in profligate consumptive splurges making them moral dissolutes and physical wrecks. There is a ring of elitist hypocrisy and entitlement about it, is conspicuous consumption by the rich more productive or morally edifying than one by the poor ? Is a farm loan waiver any different in its economic impact from surgical hair cuts amounting to as much as 90% of bad corporate loans? The poor mismanage loans and lose money, the rich manage loans, yet lose money . The lost lucre in both cases is just as lustreless. The poor can be just as fiscally responsible or squandering as the elite.
For decades the poor have been beneficiaries of doles in cash and kind, yet from a base of 71% of population being poor at the time of independence , the poverty level is down to 22% . India was among the few countries to achieve the Millennium Development Goal of halving extreme poverty by 2015 . In the decade between 2004-2014 as many as 14 cr people broke free from the stranglehold of poverty. None of this would have been possible if the recipients of state subsidies had stopped working
So what schemes like, NYAY , are more likely to do in the present times is to motivate recipients to seek a higher quality of work without having to bother daily about putting a meal on the table. That would be a wholesome development not to be decried.
A measured cash transfer to the poor , not too inadequate like the Kisan Samman Yojna, nor massive enough to disrupt the economy is a good idea. It is a state obligation too. Article 39 of the Directive Principles of state policy makes ,inter-alia, reduction in concentration of wealth a national imperative concomitant of creating a more equal social order.
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