Thursday, April 9, 2020
Home Economy and Finance Where is the money? Rahul Gandhi's promise is going to cost a whopping Rs...

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

Also Read

OpIndia Staffhttps://www.opindia.com
Staff reporter at OpIndia

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.

- article continues after ad - - 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.

- Support OpIndia -
Support OpIndia by making a monetary contribution

Trending now

OpIndia Staffhttps://www.opindia.com
Staff reporter at OpIndia

Latest News

Jammu and Kashmir: Jaish-e-Mohammad commander killed in encounter with CRPF

Sajad Nawab Dar, a Commander of Jaish-e-Mohammad, killed in encounter with CRPF in Sopore in Baramulla district of Jammu and Kashmir

Radio Mirchi RJ Sayema defends malevolent Tablighi Jamaat members; claims all TV news about them fake

RJ Sayema brazenly defends the malafide actions of Tablighi Jamaat members claiming that incriminating news about them on TV is all fake

Watch: A heartbeaking video of a three-year-old daughter crying to be with her mother in quarantine, serving as a nurse in Belgavi

Nurse Sugandha had not gone home for 11 days as she is in quarantine for 14 days and her daughter went to bed crying almost every night.

Nizamuddin railway station employee tests positive of coronavirus, 15 health workers including doctors of Railway hospital got infected

15 people including doctors and nurses have been kept in isolation after they came in contact with a Coronavirus positive person

Islamists attack Delhi CM Arvind Kejriwal after he asks them to stay at home on Shab-e-Baraat

AAP Supremo took to social media to request Muslims to stay at home for Shab-e-Baraat, which is being celebrated on the intervening night of 8th and 9th April.

Delhi police trace Nizamuddin Markaz Chief Maulana Saad, will be interrogated after completion of the quarantine period

Markaz chief Maulana Saad has has put himself under self-quarantine and he will be interrogated after the completion of quarantine period

Recently Popular

After PM CARES collects Rs 6,500 crores in just a week, Sonia Gandhi wants it transferred to PMNRF: Here is the real reason

Sonia Gandhi, the current President of the Congress party has asked the Prime Minister to transfer all the funds received under PM CARES, that was set up to fight the Coronavirus pandemic, to the Prime Ministers National Relief Fund (PMNRF)

Indian Army to take over Narela quarantine facility after Tablighi Jamaat attendees defecate in the corridor

Earlier today, two Tablighi Jamaat returnees created a ruckus and defecated in the corridor of the Narela quarantine facility

Did you know that the Prime Minister’s National Relief Fund had the President of Congress party in its managing committee

After PM Modi launched PM CARES Fund, a lot has been discussed about similarities and differences between PM CARES Fund and PMNRF

Tablighi Jamaatis’ piece of sh*t: Attendees defecate in corridor at quarantine centre, FIR registered

After reports of molesting nurses and spitting on hospital staff, two Tablighi Jamaat attendees were reportedly found defecating in the hospital corridor.

Bihar: Elderly woman killed by neighbours after fight over switching off lights on 5 April, Sulaiman, Khalil and others absconding

The families had fought when Surendra Mandal, the deceased woman's son had asked his neighbours to switch off the lights for PM Modi's 9baje9minutes call.

Subscribe to our newsletter

Each morning, get an email to keep updated with all the news, opinions and analysis published by OpIndia.

Connect with us

218,084FansLike
276,812FollowersFollow
214,000SubscribersSubscribe
Advertisements