Jan 31, 2019

Guaranteed income pledge shakes up India's election

Gandhi speaks in New Delhi. Photo: Qamar Sibtain/India Today Group/Getty Images

A political battle is brewing in India over a pledge from Rahul Gandhi, leader of the country’s opposition Congress Party, to deliver a guaranteed income to every poor citizen in India if his party wins a parliamentary election set for later this year.

Why it matters: The proposal, if implemented, would be by far the largest ever government attempt to guarantee citizens’ incomes. Around 50 million Indians, or 3.5% of the population, live in extreme poverty today, earning less than $1.90 per day. The scheme would likely extend beyond the poorest of the poor.

Guaranteed income has been gaining steady support in India for years, in part because it’s seen as a silver bullet for rampant corruption and government waste.

  • Under India’s current byzantine welfare scheme, around 36% of all government assistance doesn’t make it into people’s pockets. Basic income proponents believe that number could be reduced by moving toward a simpler and more direct transfer system. 

Gandhi didn’t clarify who would receive the new benefit, and one of the biggest challenges will be determining which segments of the population qualify.

  • Just this week, a former advisor to the current Modi government offered a similar proposal that would see 75% of rural households receive around $250 from the government each year. The scheme would cost a fairly manageable 1.3% of GDP, which could be balanced by cuts to other social welfare programs.  

But with a big election looming, the debate over guaranteed income in India is as much about political maneuvering as good governance.

  • The opposition’s announcement was strategically timed to underscore its generosity ahead of the release of a government budget expected to be chock-full of popular handouts. The rural voters who would benefit most from the proposal turned out in big numbers for the Congress Party in a recent spate of state-level election victories that’s brought Congress back from the political wilderness.

The bottom line: The call for guaranteed income is now set to be a defining issue in India's upcoming election season. It will be an important test case for politicians around the world who see it as a possibly transformative policy solution. 

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