Congress released its Manifesto on 2nd April 2019 which comprises many attractive policies, but three of them are eyeball catching compare to others. These three schemes are Nyuntam Aay Yojana (NYAY), employment and promise to implement new GST. All these three schemes directly impact the middle class. Congress with this manifesto is trying to relocate the political debate from Nationalism to the issues on the ground. Here in this edition, we will discuss the first and most hyped scheme of Congress’ manifesto i.e. NYAY.
What Is NYAY?
NYAY, a scheme based on Universal Basic Income (UBI) assures minimum Income Guarantee (MIG) of ₹12000 per person. Congress in its manifesto guaranteed this level of income to every citizen of India. For example, let’s suppose that a family of five members earns below the threshold limit, than ₹12000 will be transferred directly to the beneficiary account of that concerned family by the government. The manifesto committee of Congress headed by former finance minister P. Chidambaram has been working on the list of poll promises for the past several months.
Online media ThePrint earlier reported that Angus Deaton, the British economist who won the Nobel Prize in 2015, and French economist Thomas Piketty are advising the Congress on its ambitious minimum income guarantee scheme. The other people rumoured to be consulted to cut corners of NYAY scheme are economists Abhijit Banerjee and former RBI governor Raghuram Rajan.
Why NYAY?
The main purpose of Congress behind this idea is to eradicate poverty from India as well as to counter the scheme – Kisan Samman Yojna by ruling BJP. This scheme announcement, however, raised the storms in the political sphere. Schemes like UBI are popular around the world. Some European countries, for instance, guarantee a minimum income to their citizens. This requires extensive data collection as well as an effective cadre of welfare officers and social workers tasked with inquiring into the circumstances of people who claim to need income support.
For example, in July 2013, the Cypriot government unveiled a plan to reform the welfare system in Cyprus and created a ‘Guaranteed Minimum Income’ for its citizens and the same scheme was also implemented in other Europian countries like Algeria, Austria, Denmark, Finland etc. It seems like a great initiative for India if achieved. But the hurdles in implementing this scheme are so daunting that it seems very difficult to make it possible practically. Let’s discuss a few points here:
Obstacles To Implementing NYAY In India
Firstly, we have talked earlier that it needs extensive data collection – because this not only needs the data of families having income less than 12000 but also requires how much less they earn from threshold limit. This enhances the chance of misreporting or miscalculating as the beneficiaries of this scheme are mostly workers in unorganized sectors, which further escalate the problems in implementing this. The countries discussed above are small in population and capable of much more production than there growth level. So it’s easy for them to implement the same, but for a country like India it seems next to impossible to gather that much data in order to roll out NYAY on the ground.
Secondly, the main hurdle in implementing the scheme is its fiscal feasibility, the currently estimated beneficiaries are 50 million families, NYAY will cost 14% of current tax revenues or slightly over 2% of GDP. On the other hand, all subsidies combined are 12% of revenues, it means if we have to cut all subsidies that are not going to help finance NYAY. Plus, if we look at the current growth of India’s population, the tax revenue of India must be double after every seventh or eighth year to continuously finance NYAY. But according to reports of NSSO, the actual number of families who fall under the scheme were about 80 million which makes the situation much more severe.
So in the end, we can conclude that this is a scheme which was introduced in just a populist manner or we can say generally that it’s a poll gimmic. It seems impossible to implement the scheme until Congress come up with a better and calculated plan for the same. By the way, Congress has done enough in its manifesto to address the issues that can be profitable for voters like expenditure on education etc. or we can say that this manifesto might help Congress to come in power this time. The time will tell how it goes, till then we can only imagine what comes next.