An expensive wishlist: Congress manifesto promises can cost the exchequer Rs 15 lakh crore

The Congress manifesto promises an increase of wages under MGNREGA to Rs 400 per day from Rs 289 currently.

Congress leader Rahul Gandhi has built his 2024 Lok Sabha election campaign around ‘Nyay’, roughly translated into Justice.

"Since 1926, the Congress Party’s Manifesto has stood as a testament to trust and commitment," the Congress tweeted while mentioning the party's "five Nyay pillars: Yuva Nyay, Nari Nyay, Kisan Nyay, Shramik Nyay and Hissedari Nyay.

Gandhi’s grand promises include giving a legal guarantee to the Minimum Support Prices (MSP) announced by the government every year as recommended by the Swaminathan Commission, launching a Mahalakshmi Scheme to provide Rs 1 lakh per year to every poor Indian family as unconditional cash transfer, increasing wage under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) to Rs 400 per day, guaranteeing a national minimum wage of Rs 400 per day, increasing pension under the National Social Assistance Programme from Rs 200-Rs 500 per month to Rs 1,000,  and writing off student loans. Moneycontrol spoke to a slew of development and macroeconomists to get a sense of fiscal and administrative challenges that the Congress party will have to confront to make the promises a reality if it is elected to power. There is much difference between campaigning and governance or promises and delivery, they said.

Take, for instance, the promise of increasing pension under the National Social Assistance Programme from Rs 200-Rs 500 per month to Rs 1,000 per month. According to government data, between 2017 and 2021 on average 2.83 crore beneficiaries were covered annually, while combined central and state schemes covered 4.65 crore beneficiaries annually during the period. This alone could cost Rs 40,000 crore per annum, nearly double the current cost.

A senior economist, on the condition of anonymity, said, “Suffice it to say that these will require significant fiscal effort and sometimes out-of-the-box policymaking to prevent a full-blown fiscal blowout.”

Mahalakshmi scheme

The Congress’ Mahalakshmi scheme, which promises Rs 1 lakh to the oldest living woman member of a poor family and in case there isn’t the oldest woman member then to the senior-most member of the family, could cost the exchequer between Rs 2 lakh crore and Rs 5 lakh crore.

According to the 2011 Socio Economic and Caste Census, there are 24.49 crore (243.9 million) households in India, of which 17.97 crore live in villages. Of these, 10.74 crore households are considered as deprived. Of these 2.38 crore (13.28 percent) households have one or less room, kuccha walls and kuccha roof, 65.33 lakh households (3.64 percent) have no adult member between the age 16 and 59, 69.43 lakh (3.86 percent) are female-headed households with no adult male member between 16 and 59 and 7.20 lakh (0.40 percent) are households with differently abled member and no other able bodied adult member. According to the Census, of the deprived households 3.87 crore (21.56 percent) are SC/ST households, 4.22 crore (23.52 percent) are households with no literate adult above age 25 years and 5.40 crore (30.04 percent) are landless households deriving a major part of their income from manual labour.

If the Congress party decides to spread the Mahalakshmi scheme over five years, it will have to give Rs 1 lakh to at least 2.148 crore families in one year, this is according to the 2011 Census data. The amount will vary depending on the number of ‘poor families’ identified.

A conservative estimate puts the government expenditure at Rs 2.1 lakh crore per annum for the scheme of making unconditional cash transfers. This figure could go up to Rs 5 lakh crore depending on the number of poor families.

Also Read | Congress’ Mahalakshmi cash transfer scheme could cost between Rs 2 lakh crore and Rs 5 lakh crore

Health workers' pay

The manifesto has also promised to double the pay of frontline health workers such as ASHA workers, which would cost Rs 10,000 crore, according to rough estimates.

According to the annual ASHA update of 2020-21, India has 9.83 lakh ASHA workers against the target of 10.35 lakh across 35 states and Union Territories (except Goa and Chandigarh), making it the world’s largest community volunteer programme. ASHA workers receive performance based compensation and are categorised as volunteers with no legal obligation to the Centre or states to pay them. ASHAs earn money through incentives by delivering 60 tasks set under the National Health Mission. The states set the incentives for ASHAs, which range from Rs 1 to Rs 5,000.  Some states offer a fixed amount, over and above the incentives. Earnings of ASHA workers vary across states — a worker in West Bengal gets a salary of Rs 4,500 plus an incentive from the Centre of up to Rs 1,500. In Rajasthan, ASHA workers received a Rs 2,790 honorarium in 2021.

MSP guarantee

The Congress party has promised to guarantee MSP and implement the Swaminathan formula. Under the formula, the MSP is to be calculated as the cost of production plus 50 percent of the cost of production – which the farmers have been demanding and the government has been resisting.

A senior economist pegged the cost of expanding MSP or guaranteeing MSP between Rs 5 lakh crore and Rs 8 lakh crore.

The Congress manifesto promises an increase of wages under MGNREGA to Rs 400 per day from Rs 289 currently. This could add Rs 25,000 crore to the MGNREGA bill. The Centre had allocated Rs 86,000 crore for MGNREGA for FY24-25.

“It’s an expensive wishlist,” quipped a senior bureaucrat.

For context, India’s defence allocation was about Rs 6 lakh crore in the interim Budget, while education spend was Rs 1.12 lakh crore and health Rs 86,175 crore for 2023-24.

Lekha Chakraborty, Professor at the National Institute of Public Finance and Policy, said, “The administrative hurdles will include the digital divide. The state’s capacity is crucial for the success of these schemes. There will be inter-state differences in the way these schemes will be implemented.”