The meaning of incomes

In perspective

Access to necessary goods and services for living, particularly needed by the poorer people is largely the meaning, purpose or significance of incomes. This access is quite lacking but defines or characterises poverty, and the endeavour is to remedy it in various ways, through policy, action and allocations, and laws and institutions.

Food, nutrition, housing, health and education including skill training and running of employment schemes are the necessary inputs and the poor are in various ways and degrees ineffectively impacted by these.

Over the past 50 years, governments have devised and transformed policies with regard to meeting these needs. The running of grain procurement and warehousing machinery, minimum support prices, the Public Distribution Scheme (PDS) ration shops, the BPL (below poverty line) and APL (above poverty line) cards, interest subvention on housing and some kind of agricultural and other capital loans including overdrafts are a way of meeting the food needs of the poor and encouraging grain production in villages. In addition to all these is the famous, the praised and the frequently denigrated MNREGS or Mahatma Gandhi National Rural Employment Generation Scheme.

In this genre come the mid-day meals, ante and post-natal care of women and children, efforts to put children in schools and retaining them for as many years as possible, organising of government hospitals, health units and crèches in villages, small towns and cities are all a device to provide access to the necessary life inputs to the generally lowly endowed people.

These schemes have often been looked at as cups half empty, rather than as half full. No doubt, these have become increasingly expensive and added to the so called revenue or non-investment expenditure.

Adding to this negative impression is that there is greater waste and ineffectiveness in poorer regions in contrast to the more advanced ones, according to the impressions conveyed in the 2016-17 Economic Survey: more the number of poor persons in the district, less is the absorption of allocations.

Clearly, branding this type of expenditure as unproductive is rather unstatesmanly. And if there is improvement in institutional efficiency of these schemes and their spread, poor  children will become healthier, more educated and skilled and thus more productive. This would add to the incomes and tax collections and to entrepreneurial profits. Human development will thus witness definite advance. Hopes in this direction are not unrealistic: between 2005 and 2011, grain off take from the Food Corporation of India godowns increased by 71% and household expenditure on PDS grain by 117%; leakages have come down from 54% to 35% according to the Economic Survey. There has been a rise in rural wages and improvement in land infrastructure as a result of MNREGS operations.

Despite these positives, opinion is strong that these anti-poverty giveaways are cost ineffective and therefore they require to be replaced by cash transfers and progressively subsidy policies and organisation thereof have to be discontinued via the less government, more governance promise.

This is tantamount to giving preference to reaching cash incomes to the poor rather than incomes in the form of formal delivery of needed goods, services and employment. This tenor of thinking is culminating in the Survey suggestion of a ‘universal basic income,’ the UBI.

Blue print benefit
There is patently no universality about this cash income, and the poor have to be selected for this blue print benefit. Obviously, the needy and the deserving will often be left out and the undeserving will be selected, as is frequently borne out.

Progressive withdrawal of anti-poverty machinery and expenditure and savings thereof will go to finance this UBI. With the assumption that 100 days of MNREGS wages constitute the basic minimum income and the per day wage being fixed at Rs 170, and that there are 300 million poor households, the annual expenditure incurred will amount to Rs 5,10,000 crore.

And this is more than 10 times the allocation for this year’s MNREGS, a sum of Rs 48,000 crore. The country and the governments are unclear about how this scale of UBI will be financed and whether taxes will be raised from the rich as an equality-promoting distributive justice measure. Unless the poorer people join the ranks of the rich fast, raising funds for this and collection of taxes may be next to impossible.

Another aspect of incomes, particularly to the poor, is the enhancing of their dignity and freedom, a feeling of the sense of equality amidst others. Contribution of anti-poverty programmes and inexorable official services and subsidies will add to these.

Children of the poor will be put into schools for longer years and their training will enable them to earn more, and migrate and seek real choices in the coming years. Therefore, the choice before the country is merely to increase the efficiency of anti-poverty institutions and allocations thereof.

(The writer is formerly professor, Maharaja’s College, Mysuru)