Opinion: Karnataka guarantee schemes are about better quality of life, not ‘gimmicks’

The argument that the five guarantee schemes in Karnataka misuse taxpayers' money falls short when considering that the state's revenue primarily stems from indirect taxes alongside borrowings rather than just income tax.
Congress 's promise of 200 units of electricity
Congress 's promise of 200 units of electricity
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Ever since the Congress party in Karnataka introduced five key welfare initiatives ahead of the 2023 state Assembly elections, there has been a noticeable uproar among the Bharatiya Janata Party (BJP) and its core supporters. Criticisms about the five guarantees – Gruha Jyothi (up to 200 free units of electricity for households), Gruha Lakshmi (Rs 2,000 monthly for female household heads), Anna Bhagya (10 kg of food grains monthly for eligible cardholders), Shakti (free bus travel for women and transgender persons within Karnataka), and Yuva Nidhi (Rs 3,000 monthly for recent graduates and Rs 1,500 for diploma holders) – have varied widely, from dismissing these promises as mere ‘electoral gimmicks’ to concerns about potential laziness these schemes may cause among beneficiaries, misuse of taxpayer money, and fears of state bankruptcy.

However, these criticisms began to lose ground when the newly elected Congress government, led by Chief Minister Siddaramaiah, promptly gave these schemes the green light in their inaugural cabinet meeting in May 2023. It's crucial to challenge these misleading narratives especially now that they have come to the fore again in the light of the Karnataka government's recent demonstrations against perceived unfairness in tax allocation by the Union government. Moreover, the Janata Dal (Secular) [JD(S)] too has now aligned with the BJP in criticising these welfare programmes, despite both parties having pledged similar benefits in their election manifestos.

The argument that these schemes misuse taxpayers' money falls short when considering that the state's revenue primarily stems from indirect taxes – excise duties, GST (goods and services tax), and customs on imports – alongside borrowings rather than just income tax. This broad base of revenue sources underscores that all residents, not just the affluent income tax-paying segment, contribute to state finances.

Allocating Rs 52,000 crore to these ‘guarantee’ initiatives will undoubtedly impact the state's budget, but looking at the design of the schemes, they are unlikely to push the state into bankruptcy. Viewing this expenditure as an investment in development is crucial, as development encompasses not only physical infrastructure but also the well-being of every individual in the state. This expenditure, representing about one-seventh of the state's overall budget, is within manageable limits. Moreover, if the Union government were to clear its pending dues to Karnataka, adhering to federal norms, the state would find itself in a stronger position to steer its economy more adeptly. These dues include Rs 5,495 crore in special grants promised in the interim report of the 15th Finance Commission for 2020-21, Rs 6,000 crore as state-specific grants for Bengaluru's Peripheral Ring Road and water bodies improvement, Rs 18,172 crore in central drought relief funds, and Rs 5,300 crore for the Upper Bhadra Project.

The southern Indian states have a long history of implementing welfare schemes. A review of their state budgets reveals no signs of financial distress; on the contrary, these states continue to thrive and show economic growth year after year.

The five guarantee schemes in Karnataka are crafted to strike a balance between preserving the state's economic health and improving the quality of life for its inhabitants. Chief Minister Siddaramaiah's extensive experience in economic management, evidenced by his 15 state budgets in his political career so far, underpins the thoughtful implementation of these welfare initiatives. For example, the Anna Bhagya scheme alleviates the daily struggle for sustenance among working-class families, enabling them to focus on productivity and savings. Gruha Lakshmi empowers millions of women entrepreneurs, whose spending in turn fuels the state's economy through various taxes. Similarly, the Shakti scheme enhances women's workforce participation, contributing to economic growth. 

A recent survey on the impact of the Shakti Scheme has revealed that women are saving up to Rs 200 daily and the scheme has increased their frequency of bus travel. Women also feel safe travelling in buses due to the high presence of women post the scheme’s introduction. These welfare programs focused on women not only aim to narrow the historical income disparity between genders but also enhance women's mobility and independence, significantly contributing to their sense of security and community.

The misconception that welfare programmes breed dependency and laziness among recipients has been debunked by numerous studies worldwide. Renowned economist and Nobel laureate  Abhijit Banerjee's analysis of cash transfer programmes in 13 countries found no evidence supporting the claim that such initiatives foster idleness or misuse of funds. On the contrary, they often lead to increased work hours and earnings, as seen in Uganda, where cash grants to unemployed youths significantly boosted their productivity and income.

These welfare schemes are particularly vital in current times of economic hardship as they boost the financial capabilities of the underprivileged members of society. Though the Indian economy was lagging earlier, the COVID-19 pandemic has led to a spike in inflation, with the Consumer Price Index (CPI) occasionally exceeding the Reserve Bank of India's upper limit of 6%, increasing the cost of basic necessities. Additionally, the unemployment rate surged to over 23% during the lockdowns, according to the Centre for Monitoring Indian Economy (CMIE), placing significant financial strain on numerous households. According to the recently released data from the Government of India, the average monthly per capita expenditure (MPCE) in urban areas surged to Rs 6,459 in 2022-23 from Rs 2,630 in 2011-12, while in rural areas, it increased from Rs 1,430 to Rs 3,773 over the same period. Coupled with the rising costs of housing, healthcare, and education, these factors highlight the importance of welfare schemes in providing a safety net for vulnerable populations. 

The enhancement of purchasing power is not a charity but a right of every individual that the government is obligated to uphold, focusing on the well-being of the community over simple profit-making. By providing direct assistance to those in need, these programmes help to alleviate poverty, reduce income inequality, and ensure that all citizens have the means to meet their basic needs, thereby contributing to a more stable and equitable society.

As the opposition BJP and the JD(S) persist in their criticism of the welfare schemes, often based on weak arguments, they risk being perceived as ‘anti-poor’. This is because these schemes are designed to support disadvantaged individuals irrespective of their caste, religion, or political leanings. It's also important for society's more privileged members to appreciate the role these schemes play in promoting social justice, and support them in the pursuit of a more equitable and just society.

Vijeth Balila is working as a Political Consultant for The Policy Front which works with the Chief Minister’s Office in Karnataka. Views expressed here are the author’s own.

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