Recent poll setbacks may push Modi to shower sops on the masses before next year’s general elections.
NEW DELHI: The loss of mandate by the Bharatiya Janata Party (BJP) in the recent assembly elections may
move the Narendra Modi government in the Centre to shower sops on the masses before the Lok Sabha
elections next month.
Buoyed by its success in the assembly elections, the Congress has promised a loan waiver across the
country if it is elected. This is likely to put pressure on the Modi government to offer relief to the
masses, especially farmers, to salvage its electoral chances. However, since Modi’s is seen to be
against populism and freebie culture, the sops he might offer would not be without long-term positive
impact for the economy such as boosting consumption demand. A loan waiver across the country is not
being seen as an option for the BJP, however, it can try to assuage the masses with many other steps.
UBI is not a new idea. It got full play in the Economic Survey 2016-17. Based on a survey on
misallocation of resources for the six largest central-sector and centrally sponsored sub-schemes
(except PDS and fertilizer subsidy) across districts, the Economic Survey pointed out that the
districts where the needs were greatest were precisely the ones where state capacity was the weakest.
This suggested that a more efficient way to help the poor would be to provide them resources directly,
through a UBI. Then chief economic advisor Arvind Subramanian, the author of the survey, even
calculated the UBI for 2016-17—Rs. 7,620. IMF’s estimate is UBI of Rs 2,600 in 2011-12 prices. This is
equivalent to about 20% of median per capita consumption in that year.
UBI is being seen as Modi’s best chance to win 2019 mandate. Instead of a universal loan waiver, UBI is
seen as a more efficient means to help a large number of people, including small farmers, out of
financial distress. Since declining rural real wages are a big factor in farm distress, UBI will be a
more effective means than a one-time universal loan waiver.
Relief for retailers
Retailers or small businesses have been the core of the BJP mass base. They have been under stress due
to demonetisation and later the problems during transition to the GST. Now they are being hit by big
online retailers who can afford to offer deep discounts.
In the run-up to the 2019 Lok Sabha elections, PM Modi may soon announce a “special package” for the
retailers and traders, which will allow them access to cheaper loans through an interest subvention
scheme and insurance facilities, according to a report on The Print. The package is in the works and
may be announced soon.