ADVERTISEMENT

Congress’ NYAY Plan: The Problem Of Identifying Beneficiaries

The SECC data can be used for identifying beneficiaries for the NYAY scheme but economists say there are huge problems there.



Gayadeen Adivasi, 45, center, and other villagers hold up their job cards with no entries for the rural jobs program, known as the Mahatma Gandhi National Rural Employment Guarantee Act in the village of Lar Sauryana in Tikamgarh, Madhya Pradesh, India. (Photographer: Prashanth Vishwanathan/Bloomberg)
Gayadeen Adivasi, 45, center, and other villagers hold up their job cards with no entries for the rural jobs program, known as the Mahatma Gandhi National Rural Employment Guarantee Act in the village of Lar Sauryana in Tikamgarh, Madhya Pradesh, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

The issue of cash transfers has taken center stage ahead of the 2019 general elections. The Bharatiya Janata Party-led government, in the interim budget, had announced cash transfers of Rs 6,000 per year to farmers owning two hectares of land or less. The scheme was christened Pradhan Mantri Kisan Samman Nidhi Yojana.

The Indian National Congress has upped the ante by promising a minimum income of Rs 72,000 per year for five crore families with income levels below Rs 12,000. The scheme called Nyuntam Aay Yojana (NYAY) was announced by Rahul Gandhi, the President of the Congress Party on Monday.

The first and immediate concerns surrounding each of these schemes is the cost. While the farm income transfer is estimated to cost Rs 75,000 crore in FY20, the minimum income scheme, if implemented in one shot, could cost as much as Rs 3.5 lakh crore.

But even before costs are analysed, questions must be asked on the manner in which such schemes will be implemented. The first among these questions is the data set that will be used to identify the beneficiaries for the scheme.

In the case of the PM Kisan Yojana, land records and data collected for recently implemented farm loan waivers was used to identify early beneficiaries in states like Uttar Pradesh. For the Congress’ proposed NYAY scheme, economists believe that the ‘Socio Economic and Caste Census’ of 2011 could be start point but even this database may not be good enough for a targeted scheme.

BloombergQuint spoke to senior economists on the problem of identifying beneficiaries for the proposed NYAY programme.

Pranab Bardhan, University of California, Berkeley

Identifying the poorest 20 percent will be a challenge given the lack of income data, said Pranab Bardhan, University of California, Berkeley. He added that such identification will lead to possibilities of corruption and leakage as in other targeted schemes.

“India does not officially collect income data, so identifying the poorest 20% (as in the Congress proposal) is difficult, unless one can find some easy-to-administer and transparent surrogates for income. Getting income certificates from some officials can be a highly corrupt process. The same problem applies to other targeted programmes (including health and housing schemes), Bardhan told BloombergQuint in an e-mail response.

Maitreesh Ghatak, London School Of Economics

Ghatak agrees that income measurement will be a big problem.

“After all many studies have shown that people who are not below poverty line (BPL) have BPL cards. If income measurement was not a problem this would not happen. As we know, most of the poor live in rural areas and the unorganised sector and we do not have a direct way of verifying their incomes such as through payroll or income tax. Also, there will be incentives to under-report income to receive more under this scheme, he said in an email response to BloombergQuint.

Ghatak added that one way to reduce that challenge would be to give a flat Rs 6000 per month to the target group.

“An alternative proposal would be to give a flat transfer of of Rs 6000 to every family in the target group. This version would avoid the income verification problem and also, is simpler to understand.”

Jayati Ghosh, Jawaharlal Nehru University

Ghosh believes that in the absence of any other options, the SECC data would need to be used. The consumption expenditure survey, which could have been used for a scheme of this nature, has not been conducted by the government, leaving few options other than the SECC data.

“We simply don’t have income data. Even SECC does not provide income data. They go by a multi-dimensional definition of poverty- what kind of a house you have, consumer durables you possess, whether you have a permanent job. Income data is notoriously difficult to get,” Ghosh said.

She added that since half or more of India’s workforce is self-employed, the problem of assessing income gets tougher.

“One would have to go by their own estimation and when people know that you will get a payment if you have low income, people will understate it. To get to the bottom 20 percent, for instance, you will have to measure everybody’s income to know what the bottom fifth is,” Ghosh said.

The fact that the last SECC survey is from 2011 is also a concern since the data is now outdated. “You would have to a fresh survey. You can’t go by data of six-seven years ago and it cannot be an income survey because it is not possible to estimate income of the entire population.”

Abhijit Banerjee, Massachusetts Institute of Technology

Banerjee sees the SECC data as one option for identifying beneficiaries but said that it would need to be updated, which can be done.

“I think the SECC data will need updating. It can be done relatively quickly if the government is willing to be flexible in applying the criteria for identifying the poorest of the poor.”

According to Banerjee, exclusion rules will need to be defined in a manner that is acceptable to all.

“The key is to come up with a few quick exclusion rules (anybody with a house that meets certain norms excluded etc) and then be willing to accept everyone who satisfies them. Trying to be more precise will be much harder. This needs to accompanied with a community process where the community identifies anyone who it feels was unfairly excluded,” Banerjee explained.

R Ramakumar, Tata Institute of Social Sciences

R Ramakumar of TISS noted that the SECC data has not been collected with great care.

“There were major methodological issues with how income data was collected. The same issue exists in the collection of housing data, where there have discrepancies between the housing data collected at the Panchayat level and through the SECC. The results on other indicators of deprivation too have not matched between existing databases of state governments or panchayats and the SECC database,” he detailed.

Ramakumar added that state level data on income and expenditure would be needed to make a scheme like this impactful.

“It is important to note that the amount we are talking about in these minimum income schemes would mean a lot for someone living in Jharkhand but will not have the same effect for someone in Kerala (where the daily wage itself is around Rs 1000). There has to be an extensive and detailed survey to understand the household and income characteristics across districts and states before a scheme like this can be launched. It will take at least three to four years to conduct such a survey.”

Another issue is related to the value of this Rs 6000 guarantee over time.

“Will it be indexed to inflation to keep it's real value intact? If so, how and on what basis, as price data are not available or same across all regions due to fragmentation of markets,” he added.

Nitin Bharti, World Inequality Lab

Bharti and Lucas Chancel of the World Inequality Lab co-authored a paper earlier this month of possible minimum income guarantee schemes.

For their study they used the ‘India Human Development Survey’ conducted by the National Council of Applied Economic Research in collaboration with the University of Maryland. According to the NCAER website: The IHDS collects data on different dimensions of human development like education, caste, gender relations and infrastructure. This breadth permits analyses of associations across a range of social and economic conditions.

Based on 2011 IHDS survey and projections of the World Inequality Lab, 33 percent of Indian households will earn below the threshold of Rs 72,000 and would be eligible to the scheme.

“Guaranteeing a minimum income of Rs 72,000 to Indian households would cost Rs. 2.9 lakh crore or 1.3 percent of GDP in 2020.”

Amiya Kumar Bagchi, Institute of Development Studies

Bagchi said that no matter what database you use, you will run into trouble. For instance, it will be tough to capture migrant labourers in any dataset.

“There will be information problems for migrant contract labourers working in brick kilns and sugar plantations, primarily because they are virtually bonded to the contractor and the government functionaries will find it difficult to access them,” Bagchi said.

There will be other challenges which will need ground level support to overcome.

“For the poorest living in pipes, underneath bridges and very temporary squatments, there will be a problem of identity. Most of them will not have ration cards and Aadhar cards. A well-intentioned government can use good social workers and NGOs to give them identity. But it will be an uphill task, especially in view of the new citizenship law which has rendered lakhs of long-term residents into illegal immigrants.”

Bagchi added that similar to other targeted schemes, the possibility of corruption will remain a challenge for any minimum income scheme. At the same time, since the transfer is in case, concerns about those funds being used for harmful purposes such as alcohol consumption cannot be ruled out.

“The alternative is to deliver food security through universal rations, as in Kerala and Tamil Nadu. primary health care through public health centres, and primary, and if possible, secondary education through government schools.”

Opinion
Congress’ Income Guarantee Scheme Is Feasible If...