Congress released its Manifesto on 2’nd April 2019 which comprises many attractive policies but three of them are eyeball catching compare to others. These three schemes are 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’s Manifesto that is NYAY.

What is NYAY?

NYAY,  a scheme based on Universal Basic Income (UBI) which assures minimum Income Guarantee(MIG) of Rs.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 the 12000 Rs 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 for this idea is to eradicate poverty from India as well as to counter the scheme of PM-Kisan Samman Yojna by ruling BJP. This scheme announcement, however, raised the storms in the Political sphere. Schemes like UBI  are enough 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 & 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 here comes the hurdles in implementing this scheme are so daunting that it seems very difficult to make it possible practically. Let’s discuss here a few points:

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 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 that 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 cut all subsidies that are not gonna help to 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 those fall under the scheme were about 80 million which makes the situation much more severe.

So in the end, we can reach the conclusion that this is a scheme which was introduced in just a populist manner or we can say generally that it is a poll gimmick, This seems impossible to implement scheme until Congress come up with a better & calculated plan for this 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 make through in power this time. Rest time will tell till then we can only imagine what to come next.