Universal Basic Income Begins with Farmers; Good for Indian Economy?

The Preamble of Indian Constitution declares itself as socialist republic. After liberalization India’s economic policy turned capitalistic. Yet India has the hangover of socialism which is now in the form of Basic Income for Farmers and Loan Waivers.

Budget 2019: Universal Basic Income for Farmers

In the interim Budget of 2019 which was announced by Finance Minister Piyush Goyal in the Lok Sabha, the government has announced to provide Rs 6000 annually to the small farmers who constitute around 12 crore. This move is aimed to neutralize the anger among the farmer community.

In the recent while, the farmers were on the forefront against the government and its result could be well seen from the recent state elections where the BJP has lost badly. In order to woo the farmers this move has been taken.

The government stated that it aims to improve the livelihood of small farmers who have been suffering badly because of low income, failed crops and other difficulties. Amid agrarian crises, the government was in huge pressure to neutralize the resentment which had fatal impact on the party.

A total of Rs 75, 000 crore will be spent on this scheme where 12 crore farmers will benefit from this additional income of Rs 500 per month. This scheme is similar to universal basic income which was anticipated in this budget.

It is evident that this scheme will take a toll on the government’s treasury. With this the question arises where will such huge amount come from? In the recent few elections we have seen how the political parties have pushed for farm loan waivers as a magic wand to win elections.

PM Modi recently in an interview categorically said that the government is in no mood to waive any farm loan. As with this budget the UBI for farmers is already announced, one can assume there would be no loan waiver as the election approaches.

UBI for Farmers vs. Farm Loan Waiver

It was much anticipated that the government will bring something on the table for farmers. Instead of loan waivers the government has pushed for UBI for farmers. With the results of recent elections on board, it is clear that the farmers will be the major deciders of LS elections.

Rahul Gandhi, president of the Congress Party promised loan waivers in recent state elections and won all the three agrarian states. That created immense pressure on the government.

Dilemma for Opposition

Just before UP elections of 2017, the government announced demonetization which proved as masterstroke for the party as it helped them win 325 seats out of 404. This year as well as the government rolls out UBI for farmers which can benefit the government in LS elections. Indians have generally chosen freebies over reformist policies. The reason why PVN Rao lost despite of liberalizing economy.

If the UBI scheme goes down well with the voters then BJP is coming back more strongly than ever before. Many of them are still waiting for the alleged 15 lakhs which PM Modi allegedly promised in some rally.

Rahul Gandhi on other hand who has relentlessly been challenging the government to waive farm loans remained stumped as the government announced UBI for farmers. Congress has also faced backlash by the farmers of Madhya Pradesh, Rajasthan and Karnataka where waiver promises has not been kept.

As the government announced UBI for farmers, pension scheme for unorganized sector and tax rebate for middle class. The opposition is in dilemma on what to do next?

Implementation of loan waiver hasn’t been great which has embarrassed the Congress party. Now it has to plan something different that can touch the majority population. May be UBI for 75% of the population transferring Rs 7260 per year which will cost 4.7% of the GDP.

“बजट 2019 – किसान का बजट” – पर पढ़ें मेरा ब्लॉग । https://t.co/kZtm2MrgKO #BudgetForNewIndia pic.twitter.com/5lgZBJvG4z

— Radha Mohan Singh (@RadhamohanBJP) February 5, 2019

Good for Indian Economy?

UBI for Farmers which will cost Rs 75 000 crore will have political gains for the BJP but it will put immense pressure on the government treasury. Many other important sectors will be affected for freebies and socialistic policies.

If BJP had not done this, Congress for sure would have done if it came to power. It cannot be denied that some poll promises have adverse impact on the economy. One can say that such socialist policies are necessary evils which the country at least for now cannot avoid.

While it is good to provide welfare policies, get political gains but it should not be at the cost of economic stress.