New Income Support scheme, IGD

New Income Support scheme IGD,anti-poor scheme Inclusive Growth Dividend Scheme
  Income Support Schemes are order of the day and more popular among people, politicians and also across countries. Most argued and talked concept is universal basic income scheme, popularly known as UBI. Several economists propagated this scheme. In countries like US also, it is implemented as pilot project. In India , UBI is widely debated. The estimated cost of UBI in India ranges from 3.5% to 10% of GDP depending upon the various proposals made. Even Arun Jaitley when he was Finance Minister referred it. The earlier Economic Adviser placed it in Economic Survey . However, till today, Government could not take initiative due to huge cost burden involved. 
  But remember all income support schemes are derived from that basic concept. Out of all, most popular and maiden initiative was taken by KCR in the name of 'Raitu Bandhu' providing Rs.8000 (Rs.4000 each season) to all farmers. This was followed by 'Kalia' scheme by Naveen Patnaik extending to landless labourers also. Taking cue from these schemes, Modi brought 'PM KISAN' scheme initially to small and marginal farmers but later extending to all farmers. Rahul Gandhi also tried to emulate the same by announcing 'NYAY' scheme to below poverty line people during election campaign. So, in essence, income support schemes are in much demand among political class. 
   Now, a new scheme came into limelight in the name of Inclusive Growth Dividend(IGD). Recently in a paper presented at the India Policy Forum , Maitreesh Ghatak and Karthik Muralidharan proposed this new scheme addressing certain challenges emanated in UBI and NYAY. He wanted it simply as expansion of PM KISAN scheme. The UBI though catchy with the concept but involves huge cost whereas NYAY has many drawbacks on several grounds.  The IGD proposes that coverage will be all citizens irrespective of any identity like minority, poor, aged etc. This will be not only aimed at reduction of poverty but also aimed at limited administrative costs, no risk of inclusion and exclusion errors, lower leakage of benefits and so on. They also felt it will be a powerful tool for 15th Finanance Commission for equity and efficiency among States. IGD also boost 10% consumption among bottom 30% rural poor, they claim. It also helps financial inclusion and savings.  Now, let us discuss the details.
    IGD will transfer equivalent of 1% GDP per capita per citizen every month which at present comes around Rs.110. At present, PM-KISAN scheme gives Rs.6000 to every farmer in a year with cost estimation of Rs.87,217.5 crores for FY20. This IGD estimated to cost Rs.1,90,000 crores. PM-KISAN scheme covers farmers alone whereas this scheme covers every citizen with double the cost. The PM- KISAN is estimated to cost @0.5% of GDP whereas IGD estimated to cost@1% of GDP. NYAY scheme though covers limited  target group estimated to cost@2.5% of GDP. UBI is estimated from 3.5% - 10%. That is why, it advocated as substitute to the existing all subsidy schemes which is politically sensitive. The PM-KISAN scheme is not substitute scheme. Similarly, IGD is also supplement scheme without touching existing schemes. 
  The impact of the scheme appears to be very marginal but not true in case of bottom poor, low per Capita States and rural people. To illustrate, average rural per capita income in India is Rs.2012 . This IGD works out @5% of their income. Similarly, States like Odisha, Jharkhand and Chattisgarh average per capita income is Rs.1400 means this figure is 8%. In Bihar, MP and UP, it is 7%.  Another feature of this scheme is it is GDP linked. Every year it increases proportionately to GDP. They suggested to implement as pilot project in 20% of lowest income districts initially which estimated @ 0.2% of GDP. 
    The drawbacks in UBI are rectified and improved upon in this new scheme with affordable burden to the country  when compared to the benefits accrued through it. Most important is that it is easily implementable without risk of errors, leakages and  significantly with no additional costs. It is a concept to be taken into consideration by Government. 
 
 

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