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Will it really uplift the poor of India?

Posted in Featured, View Point

Published on April 08, 2019 with No Comments

Congress President Rahul Gandhi has captured the country’s attention with his party’s promise of a monthly ₹6,000 handout to 50 million families at the bottom 20% of India’s income pyramid. The announcement has caught the other political parties napping. It may just be an election promise, it may not get delivered if the Congress doesn’t come back to power, and there is a certain amount of uncertainty even if Congress gets back to power. Called NYAY, short for Nyuntam Aay Yojana (minimum income guarantee) it aims to reinforce what the party claims as its final assault on poverty. Since the ruling party BJP was caught napping, it came out with its estimates that suggest the scheme will cost Rs 3 trillion to Rs 4 trillion a year, or about 2% of the Gross Domestic Product. Even though the Congress party has not provided any details, and they would not for obvious reasons as the BJP is known to high-jack economy backed good programs. The announcement certainly is not a “Jumla” like Narendra Modi’s promise to put Rs 15 lakh into every Indian’s bank account. Also it certainly is not like that arbitrary step of demonetization. At Rs 72,000 per annum, it marks a breakthrough as it pushes up the basic minimum income to Rs 1,44,000 — over and above existing income/subsidies. The ruling party BJP too made an effort on similar lines three months back through the the BJP’s PM-Kisan Yojana, which provides an embarrassingly paltry amount of Rs 6,000 per year to under pressure farmers. And when Congress President Rahul Gandhi announced Rs 6000 per month, the BJP was supposed to go jittery. Some leaders of the other political parties including those with whom the Congress party is trying to forge an alliance are feeling left out by NYAY — that could address 20 percent of the population and whose potential outlay is about Rs 3,60,000 crore of our annual budgets, or 1.9% of our Gross Domestic Product (GDP)?  NYAY is apparently robbing Peter to pay Paul is how they have interpreted and have created an impression that NYAY would call for increase in taxes.

BJP reduced the corporate tax stating that it is “essential for growth”, if Congress comes out with a welfare scheme the BJP is first one to dismiss it as “an impossible one” and raises question about generating resources. When BJP came out with its Rs 6000/- per year for farmers, it didn’t mention from where the funds would be generated.

India is a country of the haves, have nots with “nots” in majority and its time that their needs and plight is addressed in right earnest. If the Congress does come to power and goes ahead with NYAY, it does have a hard task at hand.  Identifying the poorest 20% of the Indian population will be quite a task, and such a task would have its own political sensitiveness. Those who all would need to be part of the NYAY scheme are part of the informal Indian economy, which makes it even harder to estimate incomes.

This is a noble effort, but how it will pan out remains unclear. If NYAY’s addressability is doubtful, its affordability is no less so. The Congress Party President would do a great service if he can explain the certain “Hows” addressed above. Also, NYAY should  not become a “freebie dole out”, rather it should involve the beneficiary in constructive work that is beneficial for them and for the nation too.  


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