Rahul Gandhi’s Minimum Wages Guarantee: Can it be a reality?

With the 2019 general elections around the corner, and promises running high, the public has been encountering many unique promises that are quite complex to comprehend. And one such promise was made by Rahul Gandhi in Raipur campaign while addressing the ‘Kisan Abhaar Sammelan’ just four days before the Modi government’s interim budget announcement. This promise, echoed the sentiments of ‘Garibi Hatao’ started by the former Prime Minister his grandmother Indira Gandhi during the 1971 general elections which helped her form a government with majority.

On 28th January, the Congress President tweeted, “ We cannot build a new India while millions of our brothers and sisters suffer the scourge of poverty.

If voted to power in 2019, the Congress is committed to a Minimum Income Guarantee for every poor person, to help eradicate poverty and hunger.

This is our vision and promise”.

Minimum Income Guarantee

This promise is centred around the already existing Minimum Wages Act of 1948. The Central Advisory Committee, in its first session in November of 1948 appointed a Tripartite committee on fair wage. This committee came up with the concept of minimum wage. This Act not only guarantees bare subsistence, but also provides for education, medical requirements and some level of comfort.

The Minimum Income Guarantee, if implemented properly, could be proved to be a progressive income scheme, would determine a certain threshold marked as a minimum income level. As of now, it is still unclear what Congress has in mind.

Universal Basic Income vs Minimum Income Guarantee

NDA’s UBI is somewhere on the same lines of the MIG. The idea of UBI was put forward by former chief economic adviser Arvind Subramanian in his economic survey in the year 2016-17. Though some reports said that the government might consider some aspects of it, but that didn’t happen.

Unlike MIG,UBI is built on the idea that everyone is included, with the presumption that richer people might be convinced to exclude themselves. But under MIG Congress has to define who exactly is ‘poor’ and it is not that easy in India. Ones poverty is defined, identifying households that fit in the category and ensuring no one is left out is a complicated task.

The current wage law differs across states, sectors, skills, regions, occupations, owing to difference in costs of living, regional industries, capacity to pay. To introduce a structure like the minimum wage scheme uniformly throughout the country with varying demographics is very complex and has many underlying layers.

Is India Ready for MIG?

Introducing a scheme like MIG would mean miring a large number of population in absolute poverty, and also abolishing the existing subsidies and welfare programs to get the necessary funds without further straining India’s already blowing fiscal deficit.

The possibility of the government abolishing welfare schemes in India is near to zero, as no politicians would be wanted to be seen as ‘anti-poor’. Till date, no welfare schemes have been abolished, they were either renamed, tweaked or expanded.

This might not be a good time for India to introduce such schemes as the main problem that the central government need to address is employment. The government should focus more on job creation, as welfare can never be substitute productive employment.

Whilst vague promises like these are being made we should look into how effectively these can be implemented in India. And given the political challenges faced in economic reforms, MIG is a distant dream.

Source: Economic Times, Financial Times, NDTV, TOI.

Image Source: Scroll.in, Dainik Bhaskar


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