Introduction

• Revival of NYAY: A mainstream political party has revived its 2019 manifesto center-piece, the NYAY scheme (Nyuntam Aay Yojana or Minimum Income Scheme), ahead of the 2024 general election.
• Promised Benefits: The party announced that if elected, the party would implement NYAY, providing women with an annual income of Rs 60,000-70,000.

Background of NYAY and PM-KISAN

• NYAY’s 2019 Proposal: Its 2019 manifesto promised NYAY to the poorest 20% of Indian families, guaranteeing Rs 72,000 annually to each eligible family.
• Comparison with PM-KISAN: Around the same time, the incumbent government launched PM-KISAN, providing Rs 6,000 per year to farmer families, showcasing the appeal of direct benefit transfers (DBTs).

Understanding Universal Basic Income (UBI) vs. Targeted Schemes

• UBI Definition: UBI involves providing a basic income to every citizen, from the wealthiest to the poorest, with the simultaneous removal of all subsidies.
• Differences with NYAY/PM-KISAN: These schemes are not UBI as they don’t remove existing subsidies, offer a smaller amount than a basic income, and are targeted rather than universal.

Challenges and Questions Surrounding UBI and DBTs

• Affordability: No country has been able to afford UBI due to its high costs and the population size, especially in countries like India.
• Political Backlash: Removing existing subsidies to fund UBI could lead to significant political backlash.
• Effectiveness of DBTs: Despite criticisms of being mere doles or freebies, DBTs have been seen as effective in alleviating economic distress in various situations.

Rationale behind Direct Benefit Transfers

• Economic Arguments: Direct cash transfers can stimulate local economies and create a virtuous cycle of development.
• Empowerment: Providing cash can empower individuals to make their own decisions and invest in their futures.

A Radical Policy Solution: Direct Cash Transfers

• Provocative Proposition: In their 2010 book, “Just give money to the poor: The Development Revolution from the Global South,” authors Joseph Hanlon, Armando Barrientos, and David Hulme advocate for unconditional cash transfers to the poor.
• Historical Shifts in Welfare Thinking: The book outlines four paradigm shifts in welfare policies:
  1. 16th-century England’s collective responsibility for subsistence.
  2. Increased social spending and introduction of pensions in late-19th-century Europe.
  3. Mid-20th-century recognition of an adequate standard of living as a human right.
  4. Early 21st-century trend in the Global South of using cash transfers to combat poverty and promote development.

Case for Unconditional Cash Transfers

• Argument for Simplicity and Effectiveness: The authors argue that providing money directly to the poor, without conditions, is a promising approach for reducing poverty and fostering long-term development.
• Global Examples: They cite successful examples from Mexico, South Africa, Namibia, Brazil, Indonesia, and India (NREGA), where governments have implemented such policies.

Implementation Challenges and Principles

• Effective Implementation: Successful DBT programs require fairness, assurance, practicality, sufficient payment size, and political acceptability.
• International Examples: Developed countries have implemented various forms of cash transfers, indicating the potential benefits of such policies.

Public Perception and Political Strategy

• Rejection of Higher Cash Transfers: The public’s rejection of 2019 NYAY offer suggests that implementation and trust are as crucial as the policy itself.
• Political Discourse: The debate over DBTs often gets mired in political rhetoric, overshadowing the policy’s potential benefits and challenges.

Conclusion

• Balancing Act: India must balance the immediate relief provided by DBTs with long-term strategies for poverty alleviation and economic empowerment.
• Learning from the Past: The revival of NYAY and the ongoing debate on DBTs provide an opportunity to learn from past experiences and design more effective and inclusive policies.
• Future of Welfare Policies: As India approaches the 2024 general election, the discourse on NYAY, PM-KISAN, and similar schemes will play a crucial role in shaping the country’s welfare policies.

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