Here’s a comparison of the election sops offered by the BJP and the Congress


Congress leader Rahul Gandhi announced a “first-of-its-kind’ basic income scheme for India’s poorest households.

If voted into power come election time in April and May 2019, Gandhi said that the Congress would give ₹6,000/month to the 20% poorest households in India - which roughly equates to 250 million individual beneficiaries or 50 million households.

The BJP had also unveiled a minimum income support scheme for farmers in its interim Budget on February 1st, 2019. Under the scheme, titled Kisan Yojana, cash will be transferred to beneficiaries, which hold 2 hectares of land or less, in three installments of ₹2000 a year, culminating in a total payment of ₹6000 per year.

Here are how the rivals’ income guarantee schemes stack up.

TABLE A:

Income supportBJPCongress
Guarantee₹6000/year₹72000/year
Target Population120 million people250 million people
BeneficiariesSmall farmersPoorest households
Annual Cost to the exchequer₹750 billion₹3.6 trillion

At this stage, it seems that the Congress’s scheme is covering more of India’s voters - more than two times as much. However, since the start of the year, the BJP has unveiled a number of additional sops for the electorate.

In addition to the farmer handouts, the BJP outlined a pension scheme for informal sector workers in its interim budget. The scheme proposes a monthly pension of ₹3,000 above the age of 60.

TABLE B:

Pension SchemeBJPCongress
Income Guarantee₹36,000/year
Target Population100 million people
BeneficiariesWorkers above the age of 60. The scheme will eventually cover all workers in the informal sector that earn less than ₹15,000 a month.
Annual Cost to Exchequer₹5 billion

The government has earmarked an allocation of ₹5 billion for the scheme. However, the cost is relatively small because it is counting on informal workers between the ages of 29 and 60 to make a contribution of ₹100 a month.

With the scheme, the total amount of people covered by the BJP’s election sops now increases to 220 million people.

The ruling administration is also offering tax breaks for workers in the formal sector that earn less than ₹500,000 a year.

TABLE C:

Tax BreaksBJPCongress
Income GuaranteeFull tax rebate
Target Population30 million people
BeneficiariesIndividual taxpayers with annual income of ₹500,000 or less
Annual Cost to Exchequer₹185 billion worth of tax revenue

The scheme, which is targeted at individual middle-class taxpayers, is expected to provide a cumulative tax benefit of ₹185 billion to around 30 million Indians, bringing the total amount of people covered on par with the Congress at 250 million.

Lastly, the BJP has one more scheme to convincingly tip the scales in its favour. In early January 2019, Modi’s Cabinet approved a 10% reservation for “economically backward upper castes” in government jobs and educational institutions.

To qualify as economically backward, a beneficiary has to earn ₹800,000 or less a year or own 5 hectares of land or less or have a house that is smaller than 1000 sq ft. Hence, there is a significant degree of overlap with the aforementioned schemes.

The BJP has thus, has offered handouts to various swathes of India’s voters - working and not working; poor and the not-so-poor.

While it remains to be seen what else the Congress government will come up with as election campaigning intensifies, the minimum income guarantee scheme is positioned as the big election announcement.

Finance Minister Arun Jaitley has questioned the viability of the scheme, and explained that the current government was offering a higher annual payment to India’s poorest families under its existing schemes.

Unfortunately, these election sops often fail to address the lack of jobs in the economy. They implicitly highlight the relative ease in positioning “free cash” as a solution to voters’ financial troubles as opposed to job creation.


SEE ALSO:

Explained: The Modi government’s pension scheme for informal workers

No tax proposed on annual income up to ₹500,000

India's farmers will get ₹6000 a year from the Modi government
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