Type: Schemes

Introduction

• Revival of NYAY: A mainstream political party has revived its 2019 manifesto center-piece, the NYAY scheme (Nyuntam Aay Yojana or Minimum Income Scheme), ahead of the 2024 general election.
• Promised Benefits: The party announced that if elected, the party would implement NYAY, providing women with an annual income of Rs 60,000-70,000.

Background of NYAY and PM-KISAN

• NYAY’s 2019 Proposal: Its 2019 manifesto promised NYAY to the poorest 20% of Indian families, guaranteeing Rs 72,000 annually to each eligible family.
• Comparison with PM-KISAN: Around the same time, the incumbent government launched PM-KISAN, providing Rs 6,000 per year to farmer families, showcasing the appeal of direct benefit transfers (DBTs).

Understanding Universal Basic Income (UBI) vs. Targeted Schemes

• UBI Definition: UBI involves providing a basic income to every citizen, from the wealthiest to the poorest, with the simultaneous removal of all subsidies.
• Differences with NYAY/PM-KISAN: These schemes are not UBI as they don’t remove existing subsidies, offer a smaller amount than a basic income, and are targeted rather than universal.

Challenges and Questions Surrounding UBI and DBTs

• Affordability: No country has been able to afford UBI due to its high costs and the population size, especially in countries like India.
• Political Backlash: Removing existing subsidies to fund UBI could lead to significant political backlash.
• Effectiveness of DBTs: Despite criticisms of being mere doles or freebies, DBTs have been seen as effective in alleviating economic distress in various situations.

Rationale behind Direct Benefit Transfers

• Economic Arguments: Direct cash transfers can stimulate local economies and create a virtuous cycle of development.
• Empowerment: Providing cash can empower individuals to make their own decisions and invest in their futures.

A Radical Policy Solution: Direct Cash Transfers

• Provocative Proposition: In their 2010 book, “Just give money to the poor: The Development Revolution from the Global South,” authors Joseph Hanlon, Armando Barrientos, and David Hulme advocate for unconditional cash transfers to the poor.
• Historical Shifts in Welfare Thinking: The book outlines four paradigm shifts in welfare policies:
  1. 16th-century England’s collective responsibility for subsistence.
  2. Increased social spending and introduction of pensions in late-19th-century Europe.
  3. Mid-20th-century recognition of an adequate standard of living as a human right.
  4. Early 21st-century trend in the Global South of using cash transfers to combat poverty and promote development.

Case for Unconditional Cash Transfers

• Argument for Simplicity and Effectiveness: The authors argue that providing money directly to the poor, without conditions, is a promising approach for reducing poverty and fostering long-term development.
• Global Examples: They cite successful examples from Mexico, South Africa, Namibia, Brazil, Indonesia, and India (NREGA), where governments have implemented such policies.

Implementation Challenges and Principles

• Effective Implementation: Successful DBT programs require fairness, assurance, practicality, sufficient payment size, and political acceptability.
• International Examples: Developed countries have implemented various forms of cash transfers, indicating the potential benefits of such policies.

Public Perception and Political Strategy

• Rejection of Higher Cash Transfers: The public’s rejection of 2019 NYAY offer suggests that implementation and trust are as crucial as the policy itself.
• Political Discourse: The debate over DBTs often gets mired in political rhetoric, overshadowing the policy’s potential benefits and challenges.

Conclusion

• Balancing Act: India must balance the immediate relief provided by DBTs with long-term strategies for poverty alleviation and economic empowerment.
• Learning from the Past: The revival of NYAY and the ongoing debate on DBTs provide an opportunity to learn from past experiences and design more effective and inclusive policies.
• Future of Welfare Policies: As India approaches the 2024 general election, the discourse on NYAY, PM-KISAN, and similar schemes will play a crucial role in shaping the country’s welfare policies.

Central Idea

• The Minister of State for Social Justice and Empowerment recently informed about the Pradhan Mantri Anusuchit Jaati Abhyuday Yojana (PM-AJAY) Scheme during 2023 year-end review.

About PM-AJAY Scheme

Central Idea

• The Union Women and Child Development Ministry aims to establish 17,000 creches in Anganwadi centres across the country out of which 5,222 have been approved to date under the ‘Palna’ scheme.

What is Palna Scheme?

About National Crèche Scheme (NCS)

Try this PYQ from CSP 2019:

Which of the following statements is/are correct regarding the Maternity Benefit (Amendment) Act, 2017?

1. Pregnant women are entitled for three months pre-delivery and three months post-delivery paid leave.
2. Enterprises with creches must allow the mother minimum six creche visits daily.
3. Women with more than two children get reduced entitlements.

Select the correct answer using the code given below.

(a) 1 and 2 only

(b) 2 only

(c) 3 only

(d) 1, 2 and 3

Post your answers here.

Central Idea

• The Department of Food and Public Distribution has proposed a plan to source rice from the Food Corporation of India (FCI) under the Open Market Sale Scheme (OMSS) for consumer sales.
• The FCI is providing quality rice under OMSS at a reserve price of ₹29 per kg.

About Open Market Sale Scheme (OMSS)

Impact on Rice Inflation

• Current Inflation Rate: The annual inflation rate of rice has been around 12% for the past two years, accumulating over time and raising concerns.
• Objective: The department aims to reduce this inflation rate and make rice more affordable for consumers.

Significances of OMSS

• Enhance the supply of food grains: The OMSS helps to enhance the supply of food grains, especially wheat, during the lean season and moderates the open market prices, especially in deficit regions.
• Prevent wastage and deterioration of food grains: The OMSS also helps to prevent wastage and deterioration of food grains in FCI godowns due to a lack of storage space and proper maintenance.
• Provides an alternative source of food grains: The OMSS provides an alternative source of food grains for bulk consumers, state governments, UTs and private parties who participate in various schemes and programmes such as ethanol production under biofuel policy.
• Generates revenue for the FCI: The OMSS generates revenue for the FCI and reduces its subsidy burden on the central government. The FCI sells food grains under OMSS at pre-determined prices which are higher than the minimum support prices (MSPs) paid to farmers for procurement.

Challenges faced by OMSS

• Low demand from the buyers: The OMSS faces low demand from buyers due to high reserve prices fixed by the FCI, which are often above the market prices.
• Logistical challenges: The OMSS also faces logistical challenges such as transportation, handling and quality issues of food grains, which affect the timely delivery and customer satisfaction. 
• Limited impact on stabilizing the market prices: The OMSS has a limited impact on stabilizing the market prices as it accounts for a small share of the total food grain supply and demand in the country. 
• Does not address the structural problems: The OMSS does not address the structural problems of food grain management such as procurement, distribution and buffer stocking policies, which need to be reformed to ensure food security and fiscal prudence. 

Way forward

• Revise the reserve prices of food grains: The FCI should revise the reserve prices of food grains under OMSS based on the prevailing market conditions and demand-supply situation to attract more buyers and clear the excess stocks.
• Improve logistics and quality management: The FCI should improve its logistics and quality management system to ensure timely delivery and good quality of food grains under OMSS. 
• Diversify product portfolio: The FCI should diversify its product portfolio under OMSS to include coarse grains, pulses and oilseeds, which are also essential for nutrition security and have a higher demand in the market.
• Coordinate with state governments: The FCI should coordinate with state governments, UTs and other stakeholders to ensure effective implementation and monitoring of OMSS and address any grievances or complaints arising from it. 

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