Rahul Gandhi cancels Rs 12,000 income top-up scheme – report

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A report by Business Standard has claimed that the Congress Party has scrapped its scheme of offering a minimum income guarantee of Rs 12,000 per month to all households in India, replacing it with a simpler, flat-subsidy scheme.

In a press conference, the Congress Party has confirmed the changes, and reiterated that the scheme will only involve a flat payment of Rs 6,000 to one fifth of all households in the country. People falling outside this group will not be paid any money.

The 12,000 guarantee scheme was announced yesterday by Congress President Rahul Gandhi, and immediately came under instant attack for being difficult, if not impossible, to implement, and being an open an invitation to bureaucratic corruption and manipulation.

“The minimum income threshold is 12,000. Any family earning less than this, the government will pay the difference,” Gandhi had said.

However, in a report hours later, Business Standard said: “The party..scrapped its earlier proposal that envisaged topping up the gap between a poor household’s income to bring it to Rs 12,000. It has now promised a flat Rs 6,000 per month allowance, or Rs 72,000 per year, if a family’s income is below Rs 12,000.”

What makes the claim made by the newspaper plausible is a clarification tweeted by Praveen Chakravarty, head of Congress Party’s data analytics wing, seven hours after the press conference in which he contradicted Rahul Gandhi’s statement that the subsidy amount will vary based on each family’s income.

“Every poor family in the bottom 20% will get the same, uniform amount of ₹72,000 a year,” Chakravarty said.

AMBITIOUS SCHEME

According to 2011 Census, 92% of households in India reported monthly income less than Rs 10,000 for highest earning member

The original scheme, outlined by the Congress scion on Monday, envisaged a system in which each family declared their monthly income, and if it was less than Rs 12,000, the government will pay them the difference.

However, it may be difficult to implement because of the sheer number of families that declare low income levels.

According to India’s Socio Economic and Caste Census of 2011, 91.75% of all households in India claim that the monthly income of their primary earning member is less than Rs 10,000.

Even in a city like Delhi, 71.5% of the households were classified as those where the highest earning member had income of less than Rs 10,000 per month.

In a state like Chhattisgarh, nearly 97% of the households were classified as such, while in Bihar, the percentage was 94%.

Sunil Jain, editor of Financial Express, faulted the scheme for being corruption prone. in an editorial published on Tuesday.

“What complicates matters is the possibility that the Congress party is not planning a flat Rs 72,000 per poor family per year, but is planning a top-up scheme to supplement a family’s income. So, a family that earns Rs 36,000 will get another Rs 36,000 while a family that earns Rs 70,000 will get just Rs 2,000.

“While this will make the scheme more affordable, it makes it almost unimplementable, and makes it very corruption-prone. Such a scheme, that sounds ideal from the point of view of a theoretical economist, requires every household to correctly declare its income and take only what is due to it. That’s an invitation to large-scale corruption,” he said.

Economic Times, the largest circulated business daily in India, warned in an editorial that the scheme could cause much damage to India’s economy.

“..if politicians want to retain all extant subsidies and launch this one as well, India will see soaring inflation and flight of capital, new jobs would remain a chimera and achhe din (good times) will remain forever an unmet yearning for most Indians and an attractive election promise for those who refuse to turn cynical,” it said.

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