NYAY: No bridge between two Indias -R Ramakumar

-Frontline.in

A closer look at the Congress party’s proposed income transfer scheme.

“Two Indias are being created. One of the rich and the other of the poor… we are going to bridge these two Indias. And we are going to make sure that this one India that is formed has opportunity for all…. The idea is that you take the India of opportunity, you grow that India. Then you take some of the benefits, put them into the villages and thus engage and integrate that India into the first India.”

—Rahul Gandhi, different speeches

“Brand Rahul”, Aarthi Ramachandran argues in her 2012 book Decoding Rahul Gandhi, was primarily founded on the plank of “two Indias”. Over many years, Rahul Gandhi has carefully cultivated this pro-poor, left-of-centre image as distinct from, for instance, the “suit-boot ki sarkar” of Prime Minister Narendra Modi. The manifesto of the Congress party for the 2019 Parliament election is a careful attempt to build further on this brand of their leader. In today’s narrative-driven world, success in branding is determined by one’s ability to tell the best story. A few weeks ago, Modi offered his story through the Pradhan Mantri Kisan Samman Nidhi (PM-KSN), a scheme that promises to provide Rs.6,000 annually to every farmer household that has less than two hectares of land. Rahul Gandhi’s effort is to match it with an alternative offer: Nyuntam Aay Yojana (NYAY), which promises Rs.6,000 a month for the poorest 20 per cent of households.

The context

His offer has a specific background. Liberalisation of the Indian economy, particularly in the decade of the 2000s, produced high levels of economic growth. However, two associated outcomes were strikingly visible. First, the growth of incomes did not lead to an appreciable fall in absolute poverty or improvement in human development indicators. Secondly, the growth of incomes was deeply unequal in its spread. Since 2000, according to the estimates of the World Inequality Lab (WIL)—whose “core mission is to maintain and expand the World Inequality Database” (WID)—the incomes of the bottom 90 per cent of the population grew at about 2 per cent a year, while the incomes of the top 1 per cent grew at 7 per cent a year. Since 1980, if the share of income growth cornered by the top 0.1 per cent was 12 per cent, the corresponding share for the whole of the bottom 50 per cent was just 11 per cent. Rahul Gandhi’s effort has been to politically position himself as a representative of those who have lost out during this long phase of unequal growth. Thomas Piketty, a founder of the WIL, has admittedly been advising Rahul Gandhi on the design of NYAY.

There is another side to the inequality story that many observers miss. Income inequality in India is driven by inequality in wealth endowments. For 2012, the WID estimates showed that the top 1 per cent of India’s population owned 30 per cent of the total wealth and the top 10 per cent of India’s population owned 63 per cent of the total wealth. On the other hand, the bottom 50 per cent owned just 8 per cent of the total wealth. Land and buildings formed about 90 per cent of the wealth of households, and as such, unequal distribution of land has been the foundational factor that has generated and fostered income inequalities in the rural areas. This is not a new finding; scholars in agrarian studies have underlined this feature of rural inequality for decades. In the urban areas, it was the growth of financial assets and savings that explained a large part of the observed income inequality.

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Frontline.in, 26 April, 2019, https://frontline.thehindu.com/cover-story/article26781134.ece?homepage=true

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