Earn for the poor

The redistributive role of a state is one of its primary reasons for existence. Every government, irrespective of geographies, performs this function. As the country has progressed, various governments in the country have adopted a well-crafted and structured approach to welfare projects to deliver relief to the bottom of the pyramid. The welfare measures are addressing an increasing span – healthcare, primary, secondary and even higher education, direct income assistance approximating universal basic income, transport, free utility up to a ceiling and even kitchen management. More and more schemes are targeting underprivileged castes and classes, vulnerable age groups and different professions such as farmers, blue-collar workers and women. A chief minister of a state regularly boasts of covering an underprivileged individual from the cradle to the grave.

There is nothing to object to this approach in principle and the spate of welfare measures of different governments, therefore, should be welcomed. Even if they are done with the intention of bagging votes, competitive populism is only helping those in need. With the direct transfer of resources to the target, the incidents of leakage are going down too.

However, there is one caution. In their rush for populism, governments should not go on incurring debts. The debt trap is as dangerous for the government as it is for an individual. Various governments of the country are steeped in debt and spend an overwhelming part of their own tax revenues on just servicing past debt obligations. Governments should try to increase their revenue earnings to fund welfare schemes. That would help avoid debt-stress and perpetuate the life of welfare schemes. But while planning revenue generation, governments should also try to avoid going for the low-hanging fruits of taxing only the middle class, or focusing on sectors such as fuel that would trigger inflation which erodes all-round purchasing power, including that of the very people who they seek to protect.

The government should try to maximise revenue sources and try to keep rates moderate for increased compliance and simultaneously prevent leakage of revenue. Then only can long-lasting welfare programmes for the benefit of the poor be designed.