Home Economy and Finance Where is the money? Rahul Gandhi's promise is going to cost a whopping Rs 3.60 lakh crore a year, 13% of union budget

Where is the money? Rahul Gandhi’s promise is going to cost a whopping Rs 3.60 lakh crore a year, 13% of union budget

The allocation for Minimum Income Guarantee Scheme will exceed the defence budget and will be second highest expenditure after the interest payment

Today Rahul Gandhi announced that if the Congress party comes to after the Lok Sabha elections, his government will implement the Minimum Income Guarantee Scheme. The Congress president gave some details of the scheme, which assures a minimum income amount for poor families of the country.

Rahul Gandhi said that an income line of Rs 12,000 has been set for the scheme, and it will cover 20% poorest families of the country. The government will pay Rs 72,000 per year to the eligible families under this scheme, and the amount will be credited directly to the bank account of beneficiaries.

An income line of Rs 12,000 means that government will ensure this amount as monthly income for eligible families, and the government will bridge the income gap of eligible families so that their monthly income becomes Rs 12,000 per month. This means, if monthly income of a family is Rs 9,000, the government will pay them Rs 3,000, if the monthly income is Rs 7,000, government will pay them Rs 5,000, and so on. As the scheme will pay Rs 72,000 per year, this means maximum amount to be paid per month will be Rs 6,000, although this was not mentioned by Rahul Gandhi in the press conference.

- Advertisement - - Article resumes -

The Congress president mentioned that at 20% of the population, 5 crore families, or 25 crore people, of India will be benefited by this scheme. That means, at Rs 72,000 per year, there will be a total outgo of Rs 3.60 lakh crore per year under the Minimum Income Guarantee Scheme.

Although the scheme will only bridge the gap between actual income and Rs 12,000 per month, which means actual outgo can be less than 72,000 per family in a year, the fact is 20% of families will qualify for the highest level of income funding. Because a much higher proportion of households in India earn less than Rs 6,000 per month. According to Rangarajan Committee report, 29.5% of India’s population are below the poverty line. The poverty line has defined as Rs 32 per day in rural areas and Rs 47 per day in urban areas. This means people below the BPL in rural areas earn below Rs 960 per month, and people in urban areas earn below Rs 1,410 per month. Therefore, all of 20% population or 5 crore families will qualify for the highest amount of Rs 72,000 per year under the scheme.

If implemented as promised, this will be the second largest head of expenditure of the union government. The estimate of total expenditure for the 2019-20 budget is Rs 27.84 lakh crores, which means the total budget for the scheme will be 13% of the budget. This will be more than the 11% allocated for the defence expenditure in the 2019-20 budget, but less than the interest payment which leads the government expenditure at 24%. The amount for the scheme will also be around 2% of India’s GDP. The amount needed for the scheme will be the 6 times the budgeted amount for MGNREGA scheme, which is a big social welfare scheme. The MGNREGA budget for 2018-19 was Rs 55,000 crore, which was raised to Rs 60,000 for the 2019-20 budget.

13% of budget is a major portion, and this means either the government will have to drastically increase its revenue, or have to cut expenditure in other sectors. Or the government may opt for deficit budgeting, which is favoured by the Congress party, but the amount is too large to be funded by borrowing only. Although Rahul Gandhi said that all calculations have been done and the scheme has been found to be viable, he didn’t explain how. But by all estimates, this scheme will create a large hole in the finances of the government.

Sharing is caring - Share This Post and Support:
We need your support to survive in the media industry. Please consider paying us for the content we produce:

To know more about these payments, please click here.


Most read articles recently

Here is what RVS Mani, bureaucrat of Congress era, has to say about Hemant Karkare and his involvement in ‘Saffron terror’ narrative

With reference to Hemant Karkare, RVS Mani makes some startling revelations in his book.

Cambridge University confirms that Rahul Gandhi did his M.Phil using the name Raul Vinci

Cambridge University confirms that Rahul Gandhi did his MPhil using the name Raul Vinci

Read details: Rahul Gandhi lands in a soup over his Amethi nomination, scrutiny postponed after questions raised on his British citizenship

After four objections filed against Rahul Gandhi's nomination from Amethi, scrutiny of his nomination postponed by 2 days

Convenor of Delhi Congress IT cell shares badly edited video accusing PM Modi of using an abusive word

Congress' Gaurav Pandhi has earlier also spread misinformation to attack the central government

With Rahul Gandhi contempt notice up for hearing, CJI says allegations to dissuade him for hearing important cases

CJI Gogoi also said, in response to the sexual harassment allegations, that this is a pressure tactic to dissuade him from hearing important cases that are up for hearing next week.

Air Vistara feels honoured to have decorated war vetaran Major Gen G D Bakshi onboard, ‘liberals’ decide to shame them

'Liberals' decide to switch loyalties to another airline after Air Vistara feels honoured to have Major Gen G D Bakshi onboard

Samajwadi Party friendly ‘journalist’ associated with The Wire caught spreading lies about Yogi Adityanath, deletes tweet after getting called out

Rohini Singh, who is notoriously known for her propaganda, along with her colleague Prashant Kanojia, has yet again posted fake news to target the UP Chief Minister Yogi Adityanath.

‘Liberals’ bully Air Vistara into deleting their tweet honouring decorated war veteran onboard

Bowing down to the pressure of the bullies masquerading as liberals, Air Vistara has deleted the picture. 

Chief Justice of India alleges ‘larger plot’ and pressure tactics after leftist websites break story of alleged sexual harassment

Today, the Chief Justice of India, Ranjan Gogoi was accused of sexual harassment by a former employee.

Latest articles

Connect with us

156,524FansLike
129,274FollowersFollow
54,113SubscribersSubscribe

Don't miss these

Sharing is caring - Share This Post and Support: