India's New Election Battleground: Guaranteed Income

India's New Election Battleground: Guaranteed Income

A political battle is brewing in India over a proposal to implement one of the world's boldest experiments in poverty alleviation. On Monday, the leader of the country's opposition Congress Party, Rahul Gandhi, pledged to deliver a guaranteed income to every poor citizen in India if his party wins a parliamentary election set for later this year.


The proposal, if implemented, would be by far the largest ever government attempt to guarantee citizens' incomes. Around 50 million Indians, or 3.5 percent of the population, live in extreme poverty today, earning less than $1.90 per day. The scheme would likely extend beyond the poorest of the poor.

Guaranteed income has been gaining steady support in India for years, in part because it's seen as a silver bullet for rampant corruption and government waste. Under India's current byzantine welfare scheme, around 36 percent of all government assistance doesn't make it into people's pockets. Basic income proponents believe that number could be reduced by moving toward a simpler and more direct transfer system.

Mr. Gandhi didn't clarify who would receive the new benefit, and one of the biggest challenges will be determining which segments of the population qualify. Just this week, a former advisor to the current Modi government offered a similar proposal that would see 75 percent of rural households receive around $250 from the government each year. The scheme would cost a fairly manageable 1.3 percent of GDP, which could be balanced by cuts to other social welfare programs.

But with a big election looming, the debate over guaranteed income in India is as much about political maneuvering as good governance. The opposition's announcement was strategically timed to underscore their generosity ahead of the release of a government budget expected to be chock-full of popular handouts. The rural voters who would benefit most from the proposal turned out in big numbers for the Congress Party in a recent spate of state-level election victories that's brought them back from the political wilderness.

The call for guaranteed income is now set to be a defining issue in India's upcoming election season. It will be an important test case for politicians around the world who see it as a possibly transformative policy solution.

Demography is destiny. That ominous-sounding pronouncement, credited to French philosopher Auguste Comte, is today taken to mean that a nation's fate depends on the youthfulness of its population. For a poor country to become rich, it needs lots of young people ready to work, to support those too old or too young to work, and to pay taxes. This is called the "demographic dividend."

That's an important part of China's success story. Over the past 40 years, more than one billion people have emerged from poverty in China. Waves of young people surged from the countryside into cities to work in factories. The state invested in education, and wages helped young workers, and then their children, go to school. The state also began a drive to develop the technologies of the future, by any means necessary. In China, once dirt-poor, hundreds of millions have created a middle class.

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