Abhijit Banerjee interview: Role in NYAY explained

NYAY was not well designed, says Nobel Laureate Abhijit Banerjee; read full interview text here


In the above context please read the submitted version of my article on NYAY published in the May 2019 issue of The Global ANALYST
M G Warrier

NYAY: How to make it deliver justice to the poor?

M G Warrier

One fine morning during the second week of March 2019, Indian Elite woke up and remembered an old Chinese proverb they had long forgotten about. The context:
The announcement of Nyunatam Aay Yojana (NYAY), a scheme proposed to be included in the Congress Manifesto for Election, 2019, by  the Congress President Rahul Gandhi. 
The proverb:
"Give a Man a Fish, and You Feed Him for a Day. Teach a Man To Fish, and You Feed Him for a Lifetime"
My friend Mohandas from Chennai had this to say about NYAY and the proverb:
“Now we may have to give him not only training to fish, but also a
Fishing  Rod. For deep sea Fishing he may require a Motor boat costing about Rs.10 to 20 lakhs! He has to be supported during the lean season for about 2 months when
deep sea Fishing is banned to enable fishes to grow and for breeding purposes.
We have to save the Indian farmer from committing Suicide.
We have to save him from the clutches of the village money lenders. We have to support him during crop failure by giving free Crop Insurance.  Indian agriculturist is born in debt, lives in debt, dies in debt and bequeaths debt.
In India the poor becomes poorer and the rich becomes richer.
We have to break this trend by giving the poor proper free education, better skill-development, jobs for all educated youth by promoting healthy industrial growth. The unskilled workforce should be fully utilized for jobs for which they are necessary and suitable, like building roads, desilting tanks and  lakes as also several other manual work which can be performed by giving them some orientation. They too should be paid ‘living wage’ which will be much higher than the proposed dole which is called NYAY, and in many cases, the present statutory minimum wage! 
No able bodied person should be allowed to beg, or receive doles, even if political expediency discovers conduits like NYAY.”
It is not a question of whether the dole out is workable or not. It is a question of human dignity and prestige. Citizens would not like to take a government dole without doing any job. The very idea of encouraging idlers and beggars in the country is not welcome. It is insult to human
Having said that, a “Minimum Income Guarantee Scheme” is an idea worth pursuing and therefore, the debate on NYAY may survive this election, irrespective of Congress’ fortunes.
As part of his sales talk for promoting his new book “The Third Pillar”, former RBI governor Dr Raghuram Rajan was also seen justifying NYAY (Hindi word for justice), leaving the audience wondering whether he is still on theory and doesn’t want to go deep into the ground level realities of ‘poverty cultivation’ in India. One gets an impression that his own research for putting together “The Third Pillar” hovering around sophisticated economic theories and history, did not go deep into the present realities of urban and rural India.
In India, the elite political leadership which controls all the ‘pillars’ of governance, is still comfortable to retain a target ‘catchment area’ of people below poverty line poor and illiterate, to ensure availability of cheap labour (now rechristened as ‘outsourced work’) in different sectors. It is in this context that we are prepared to dole out a portion of taxpayers’ money to keep a ‘reserve’ of illiterate and idle people who will be available on call at starvation wages to do unskilled work without any demand for fair wages.
The media and the analysts (economists included) are reluctant to highlight the negatives of NYAY as any word uttered against NYAY is likely to be interpreted as a criticism against the proposal for ‘Minimum Income Guarantee’ which is a noble concept.
Really, there is a case for expanding several schemes like the Employment Guarantee Schemes already in operation and putting together a comprehensive scheme, if possible outside the government budgets, having the following features:
(i)                                     Target beneficiaries should be those who are in the employable age group ( say, 20 to 60years)  considering all skilled/unskilled jobs for which they will be available on call, not presently availing the benefits of existing statutory schemes for social security. They can be asked to register with Employment Exchanges or at Special Employment Desks created for the purpose in offices of Municipal Corporations or other Local Self Government Offices.
(ii)                                  The payment should be to unemployed members of families which have no earning members with income over a pre-decided threshold limit and limited to the real gap between the threshold level and the actual.
(iii)                       The funding could be from a corpus created by contributions from prospective employers who will benefit from the skill development initiatives and the availability of candidates with identified skills. While employment is provided through the scheme, a fixed percentage of the wages matched by an equal contribution from the employer could be retained for post-job social security of the beneficiaries.
(iv)              Care should be taken to ensure that even where employment assurance schemes are implemented, the compensations should be realistic.
Dr Raghuram Rajan has done a disservice by suggesting that a refined NYAY may be workable which brings him down from the pedestal of a good philosopher on human dignity in addition to his internationally accepted status as a renowned economist. While on the subject, Dr Rajan did not even touch upon the issue of funding the scheme.
Nyunatam Aay Yojana (NYAY)
NYAY is more of an election slogan comes out clearly in a short article by Bhalchandra Mungekar, published in The Hindu Business Line (April 13, 2019). Mungekar is a former member of the Planning Commission and Rajya Sabha and was also a member of the Congress Party’s manifesto committee. The NYAY included in the Congress manifesto for 2019 Election assures 5 crore poorest families covering 25 crore people a guaranteed minimum income of Rs 6000 per month or Rs 72,000 per  year. The assumption, according to Mungekar was that even the poorest family will havea monthly average income of Rs 6000 and would need only additional  Rs 6000 for the target minimum monthly income of Rs 12,000. Several options discussed by him in the article confirms one’s fear that before inclusion of NYAY, no thought has been given about raising the resources. Slogans are slogans.

Universal Basic Minimum Income

Article 39 of the Indian Constitution mentions certain principles of policy to be followed by the State, including providing an adequate means of livelihood for all citizens, equal pay for equal work for men and women, proper working conditions, reduction of concentration of wealth and means of production from the hands of a few, and distribution of community resources to ‘subserve the common good’, Constitutional objectives of building an egalitarian social order and establishing a Welfare State by bringing about a social revolution assisted by the State and have been used to support the nationalization of mineral resources as well as public utilities. Further, several legislations pertaining to agrarian reforms and land tenure have been enacted by central and state governments, in order to ensure equitable distribution of land resources.
It was in this context that during 2016, NITI Ayog mooted the proposal to accept Universal Basic Income (UBI) as one of the themes for the Economic Survey 2016-17 which was perceived as an effort to pursue further the spirit of the directive principles of state policy and re-dedicate budget exercise as a tool for ensuring distributive justice, which is a responsibility emanating from the constitutional provisions.
As a healthy debate on NYAY picks up, the various components of the concept of UBI, adequacy of the present levels of minimum wage, the path towards ‘living wage’, the relationship between wage and savings, savings and social security, wage and healthcare and education expenditure in low income groups, factoring in the component of expenses for post-job life (pension in the case of regular jobs in the organized sector) in remuneration structure  and so on will surface.
So far, discussions on such issues were isolated or confined to academia or research papers and committee reports. For India, once the political leadership gets convinced about the need for a realistic UBI, resources will not be a problem.
Writing about UBI in November 2016 in Moneylife, I had expressed the fear that “One possibility is, some vested interests will hijack proposal of UBI to mix it with “unemployment dole”, an unhealthy practice existing in developed countries.” With the floating of the idea of NYAY seriously, this fear has come true, though as an election promise, at this stage.
Ground level realities
There are several pockets in India, including many in states like Kerala, local population has successfully eliminated poverty and shown encouraging improvement, with regard to crucial human development indicators. Attribute it to militant trade unionism or the color of the flags held by parties in power. The credit for this really goes to the insistence by enlightened workforce for a minimum basic wage. 
Hopefully, the concept of  Universal Basic Minimum Income, as the debate picks up, will result in  healthy deliberations on the need for grassroots level improvements in income distribution to ensure sustainable economic growth. A pragmatic approach to sharing of wealth can reduce several security concerns world over and ensure better living conditions, not only for the deprived class, but for many from the rich and the powerful who feel insecure today.
The concept of minimum wage
Writing in The Hindu on September 1, 2016, author and renowned journalist G Sampath raised the question, “Do we need a minimum wage law?”. He went on to explain the concepts of living wage, fair wage and minimum wage and debated the seriousness with which stakeholders are approaching these concepts. One has to concede that it is a farce to retain the concept of minimum wage which does not ensure an income for the worker (who works full-time) which helps him and his dependents survive with some savings left for the family’s social security needs. The present levels of minimum wages vary across geographies and are not realistic. They do not reach anywhere near the cost of 5 components mandated by the 15th Indian Labour Conference (1957) which were:
i)                   The wage must support three consumption units (individuals)
ii)                 Food requirements of 2,700 calories per day
iii)               Clothing requirements of 72 yards per year per worker’s family
iv)               Rent for housing area similar to that provided under the subsidised housing scheme and
v)                 Fuel, lighting and miscellaneous items of expenditure to constitute 20 per cent of the minimum wage.
It may be recalled that the Seventh Pay Commission had fixed minimum wage for central government employees at Rs 18,000. 
Viewed in the above context, GOI will have to concede at some stage the demand for some reasonable relativity for wages of the workers in the unorganized sector with the entitlements of workers in the organized sector having comparable responsibilities. Whenever specific issues relating to job security and compensation are raised by the unions or external agencies in the context of human development indicators in India showing uncomfortably low levels in comparison with similarly placed developing countries, some sporadic initiatives are taken by Centre or state governments. A comprehensive legislation covering all aspects of service in the unorganized sector is the need of the hour. Let us answer Sampath’s brief question “Do we need a minimum wage law?”, in the affirmative, as we need it to know the extent of aberrations and violations and for further refinements to think of a ‘living wage’ at the appropriate time. During 20th Century, we used Railway Time Tables to know the number of hours by which some trains were running late!
Time is opportune to revisit the prices, wages and income policy. If we do not do this, labour migration issues within the country and flight of skills and expertise from India may rise to unmanageable levels giving rise to several social problems. The revamp of prices, wages and income policy need to be done quickly and for making the processes transparent and findings and subsequent action plans acceptable for the stakeholders, there should be meaningful debates in legislatures and with users of services of workers. 
       Simmering discontent in the workforce emanating from the feeling that there is exploitation by the users of services, taking advantage of the helplessness of the workers, affect productivity and can have long term negative impact on economic growth. Sooner the governments and corporates amend the present approach, the better for the country.


Popular posts from this blog


The King of Ragas: Sankarabharanam