Resources for Welfare Expenditure -Prabhat Patnaik

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published Published on Feb 24, 2019   modified Modified on Feb 24, 2019

The basic income scheme that is in the air these days, which amounts to handing over a certain sum of money to every household to ensure that it reaches a threshold cash income, is an extremely flawed scheme. Instead of enjoining upon the state the obligation to provide essential goods and services like food, education, and health, to its citizens, it absolves the State of all such responsibility, once it has handed over a certain amount of money, an amount moreover which is not truly indexed to prices and whose transfer is usually accompanied by a withdrawal of existing subsidies and welfare expenditures. Besides, even conceptually cash transfers amount to a largesse given by the State, while what should be insisted upon is the right of every citizen to a minimum standard of material life which the State has a duty to provide.

Whenever this issue of economic rights of citizens, on a par with the political rights enshrined in the Constitution, is raised, the question is typically asked: where are the resources for it? Such a question of course is never raised when the budget hands over huge amounts as concessions to capitalists, ostensibly to boost their “animal spirits” so that they can invest more and raise the growth rate. It comes up only when raising the people’s living standards is under discussion. Still, no matter how dishonest the questioners’ intent, it is worth providing a rough answer to this question. This is given below.

Let us take five basic universal and justiciable economic rights: right to food, right to free publicly-provided quality healthcare through a National Health Service, right to free publicly provided quality education, right to employment, and right to adequate old-age pension and disability benefits. And let us see how much these rights would cost. We shall examine only the additional expenditure over and above what is already spent on some of these items at present, as if we are taking a snapshot picture today. These estimates rely on the work of many independent researchers, who are not specifically named.

It has been estimated that for providing employment for 100 days per household to 37.5 million urban households (living in towns with population less than 1 million), the total cost, including both wages and material costs (in the ratio 50:50), at wage rates which vary according to skill-level, Rs.300 per day for the bottom 30 percent, Rs. 500 for the next 30 percent and Rs.700 for the next 20 percent (the top 20 percent are assumed not to avail of such work) will be Rs. 2.8 lakh crores per annum. In rural areas if MGNREGS is actually made to provide 100 days of  employment to every job-card holder at a wage rate of Rs. 200 per day then the total cost would be Rs. 2.3 lakh crores. The two schemes together, urban and rural, add up to Rs. 5.1 lakh crores. Since Rs.60000 crores is the current allocation for MGNREGS in the central budget, the additional amount required is Rs.4.5 lakh crores.

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(This article was originally published in News Click on February 18, 2019.)

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