On a sunny afternoon in Liverpool, I was giving a lecture at the Music Department of Hope University, when a freewheeling chat on why music is necessary led to a discussion on depression, psychological well-being and health.
One Kenyan student argued passionately about the importance of music in regions where poverty and depression were rife - such as neighbouring Rwanda and her own homeland. We moved on to other topics, but the passion in her voice stayed with me for days, specifically the discussion on absolute poverty.
One of the things she touched upon was the work done by GiveDirectly, a global charity that works on the premise of Unconditional Cash Transfers (UCT) to the poor. This in turn aims to achieve the principle of a Universal Basic Income (UBI), an idealistic notion that seeks to address the basic needs of every individual with a view to eliminate poverty. These transfers are periodic, non-withdrawable and everyone identified receives an equal amount at a specific frequency, no questions asked.
Why does a musician have to bother about these issues? Indeed, why should anyone outside of those working on economic policy even comment on this?
To start with, let us understand that Unconditional Cash Transfers are the exact principle behind NYAY, a key promise made by Congress President Rahul Gandhi ahead of the Lok Sabha polls. With a promise of Rs 72,000 per annum to every individual identified (roughly 20% of India’s population), the bill is likely to be humongous, estimated at under 2% of the GDP by the UPA, although experts argue it could be far more. Will this burden on the economy make sense?
GiveDirectly's work in Kenya and Rwanda has been cited by multiple people worldwide as an example that indicates the possible success of the scheme. Increase in consumption, psychological well-being and standards of living have been used as evidence for this. Many studies show that contrary to fears reckless consumption of temptation goods (alcohol or tobacco, for instance) did not happen. In fact, investment in farm equipment or tools of trade is reported to have increased.
Let us keep in mind that the scheme was introduced gradually. Specific villages were chosen, and the scheme was rolled out in a sampled manner with measures put into place for testing its efficacy.
India's case is somewhat different. The Great Indian Middle Class (of which most of us are members, some "upper" and some "lower" berth) has started a rather futile debate on how does it affect us. Many claim that bad habits of the poor will rise - domestic helps will stop showing up for work, disparity between those who claim to be poor but actually are not versus the others will widen and so forth. In conversations that are largely fuelled by watching rabble rousers on the idiot box every night, many claim that our incomes will be taxed more severely to benefit those who will simply stop working and enjoy the benefits.
Setting aside the crassness and total lack of empathy of some of these comments, not to mention India's inherent class politics and inequality, let us examine the facts as laymen.
The idea of the Universal Basic Income is an ideal, and extremely well-intentioned.
Imagine a world or just our country being rid of absolute poverty, where everyone has access to a basic standard of living, education and health. In the current scenario, though, this comes at a high price.
Including 20% as opposed to excluding those with easy-to-observe standards of living already is a nightmare. How will the government identify who qualifies? What happens when the economy slows down. Who will bear the cost then? Isn't it better to develop a transparent and easy system of identifying those who will NOT qualify, and lessen the fiscal burden imposed by this scheme?
After all, someone is going to have to foot the bill, which will definitely be larger than anything you have ever imagined. Yes, there will be disparity in overall income even among the households that benefit, as many earn a monthly wage already (meaning, the base is not 0, to start with).
The "top-up" idea does not work either, as the impossibility of ascertaining exact incomes in the unregulated sector is mindboggling. So one household could end up receiving Rs 18,000 monthly, say, while another could end up with an income of Rs 10,000. Both of these households could be next to each other. This is bound to create conflicts, as some economists argue.
With a fiscal deficit (yes, the government's books don't quite look that good at the moment), this is going to be a tough bill to settle. Some other welfare schemes (the MGNREGA or Mahatma Gandhi National Rural Economic Guarantee Act) will have to be scrapped if the 20% should all be made equivalently eligible.
Even if the economy grows by 7%, the burden of this scheme then is likely to be too high to bear even though the UPA and its economic advisors call it doable. There is no doubt that there will have to be some other fiscal levies (taxes, folks!) on the higher income groups (including us) to keep this scheme rolling.
Many in India's unregulated sector earn the Rs 6,000 Rahul has promised by working very hard. Maids who clean apartments, for instance, earn a little over this by working across multiple households in most typical cases. The dole is likely to have mixed effects, disincentivising some from doing such work. Common resources will see an increase in consumption. There is definitely the possibility of a wage inflation, with a demand for higher pay among those in the unregulated sector with this increased competition for resources. This will once again pressurise those who employ these human resources.
To sum up, the only worry for the majority of us is the size, the sheer impossibility of identifying the truly deserving, and the lack of transparency in where the bill will be serviced from, that drives uncertainty. But we should certainly exercise empathy in resolving what should be a common issue for all of us – eliminating poverty.
Maintaining economic class lines is hardly the justification for dismissing NYAY altogether. I cannot think of anything more "anyay" than that.
GiveDirectly's assessments revealed that there was no long-term effect on health or enrolment in educational institutions. As we all know, these are the key benefits that we would all desire. But what if NYAY's rollout fails to achieve even this because of the reasons mentioned above? What then would we have achieved?
All in all, NYAY at the moment is a mixed blessing, given the sheer size and complexity of India. For now, it seems to be an election slogan that may not actually be practical!
In the meanwhile, here's why a musician is useful. The zeitgeist, delivered to you as a song!
Anil Srinivasan is a well-known musician, educator reaching over 3 lakh children, and an Associate Professor of Practice at KREA University
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