Express View on Rajashthan’s Minimum Income Guarantee: Limits of welfare

The Rajasthan Minimum Guaranteed Income Bill 2023, tabled by the Ashok Gehlot led government on Tuesday, has taken a rights-based approach towards building a social security net. First announced in the state’s budget earlier this year, the framework centres around three areas: The right to minimum guaranteed income, right to guaranteed employment, and a right to guaranteed social security pension. However, the state government’s welfarist agenda doesn’t end here. In its budget, it had also proposed a Gig Workers Welfare Act, under which a gig workers welfare and development fund would be set up. Such policies, when seen in conjunction with others — this would include the provision of free or heavily subsidised foodgrains, health insurance and cash payments — reflect a concerted attempt on the part of both the Centre and the states to put in place a more expansive and far reaching social security net.

The Rajasthan state government intends to operationalise the guarantee of minimum income and employment by providing eligible individuals work in both rural and urban areas through the employment guarantee schemes. It has also sought to guarantee 125 days of work in both areas. For those unable to work — this category includes the specially disabled, single women, widows and the old — it seeks to provide a pension. While the idea of ensuring a minimum income for citizens is desirable, the approach taken — operationalising it through an urban employment guarantee scheme — is perhaps not the best way to go about it. Such schemes can face several issues. For instance, demand for work in urban areas is not seasonal in nature, unlike demand in rural areas that is met through MGNREGA. This tends to complicate the design of the scheme. There are also questions over the kind of public works available in urban areas and the capacity constraints of urban local bodies.

Though this welfarist agenda may have wide popular appeal, there are fiscal constraints to contend with. Rajasthan is amongst the states with the highest debt burden in the country. The state allocates less on more productive forms of spending. A report by the RBI had estimated that the state announced freebies worth 8.6 per cent of its own tax revenue in 2022-23. While such policies are well intended, they reflect the inability of the economy to create productive forms of employment at the scale required to alleviate social pressures for fiscally stressed states. The focus should be to create greater employment opportunities, especially at the low end of the skill spectrum, ensure access to health and education, and provide paths for upward mobility.