Imperative for Modi govt to grant minimum basic income to vulnerable sections in second wave of coronavirus

The second wave of coronavirus sweeping India has virtually paralysed people’s lives in many states, leading to imposition of night curfew and even lockdown virus affected districts. The threat of a prolonged lockdown is looming large if the wave goes on intensifying. Migrant workers in Delhi and Maharashtra are already panicky and they will be heading to their home states once again if the virus situation does not improve.

The country faces an extraordinary situation and this needs immediate measures to protect the most vulnerable sections of our society. The poor and the unorganised sections of the labour force have already suffered immensely during the first wave in 2020. They were hoping for a possible turnaround in their fortunes in recent months, but again, the signs are ominous as the present wave is expected to reach its peak by the end of May, according to experts.

This means that the fiscal 2021-22 will not be the turnaround year for India as expected; it will be the year to keep the economy somehow floating without major long term damage.

So far, all the rescue packages announced by the Modi government have had cosmetic impact on the poor and the jobless who have been affected the most. All surveys made in the recent period have shown that the rich and the big corporates have made more earnings in the pandemic year, both in India and the other western countries, while the poor people’s living standard has gone down. In India, the inequality has widened further and this cannot be tackled by conventional thinking by the BJP-led government.

A recent study by the Pew Research Centre estimates that the ranks of poor have increased in India by around 7.5 crore in the last one year since the brunt of income loss and job cuts have been most borne by the lower sections of the population, including the workers in the unorganised sector. The middle class section has shrunk as well in India.

A CMIE report shows that the savings in India have increased because of the pandemic but the consumer demand is not increasing because the majority of the population has no surplus and even if they have, they are cautious to go for demands excepting essentials. The rich are also selective in spending, but their demand area is limited and that alone does not lead to any steep hike which is needed at this time for pepping up the economy.

So what is the best option at this extraordinary time? All leading development economists are now talking of a minimum basic income meant for the vulnerable sections of the society in India.

The US has a capitalist economy with high living standards. Even there, President Joe Biden has framed his rescue package proposals in such a way that it gives additional income guarantee to the lower sections of the American society, apart from other pro-working class measures.

As usual, the PM's addresses these days are more of optics, rather than substance. Like earlier times, he repackaged the stimulus using high sounding words, but utterly failed to take care of the most important job at hand — that of directly transferring cash to the poor of both rural and urban areas, including the jobless.

The Central government defied all novel suggestions made by leading economists like Amartya Sen, Abhijit Vinayak Banerjee and Raghuram Rajan, and instead opted for a shaky dependence on huge bank loan-based revival without taking into account the grim reality that nobody, even those who have funds, is in a mood to spend.

The poor and the jobless, in staggering numbers, can be made to spend, and thus boost consumption, only through direct transfer of funds which is possible through this universal basic income.

The country’s economy was already crisis-ridden before the first corona attack, due to the huge slowdown — a direct consequence of demonetisation, haphazard implementation of the GST as well as global trade problems. So, this double attack on the Indian economy needed a massive thrust to boost domestic consumption at this critical hour.

The boost cannot be achieved without funding the vast majority of the rural and urban poor, including those who have lost livelihoods in the last 14 months because of the countrywide first lockdown forcing millions out of their jobs, especially in India’s precarious but sprawling informal sector.

The Universal Basic Income (UBI) issue generated a big debate in the West, especially the USA where the issue of inequality came to the fore in a big way during the last presidential elections. Prominent Democratic Party leader Bernie Sanders in USA has been talking about economies being run in the interests of one per cent and promising to change the system to favour 99 per cent.

Even the capitalists of the new generation like Mark Zuckerberg and Chris Hughes, co-founders of Facebook, have argued for UBI as not necessarily a comprehensive solution, but as at least a moderating analgesic for the severity of income inequality and poverty in countries, including global powers like America.

Congress leader Rahul Gandhi included the minimum basic income of Rs. 6,000 per month to the people below the poverty line as a part of the Congress manifesto before the 2019 Lok Sabha elections. He is now calling for Rs. 7,000 a month for the poor, both rural and urban and this makes sense at this time of devastated economy. The amount can be reduced to Rs. 5,000 or even Rs. 4,000 per month, but this is of prime need now for saving the lives as also the tottering Indian economy.

Prime Minister Narendra Modi can still salvage the economy by taking up seriously this proposal of minimum basic income to help the poor and infuse demand in the economy. His government should take cue from the moves made by the new US president Joe Biden to help the poor in a corona impacted US economy.

For India, such a pro-poor approach is far more needed if this government is really interested in building a strong India.

(IPA Service)

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