Rahul Gandhi announced yesterday his plan to award Rs. 72,000 annually to every family below the poverty line. While the promise of a dole has been deemed a fantasy that the Indian Economy cannot afford right now, the Congress party continues to promote its harebrained idea as profound wisdom.
We have consulted economists, this is doable, and we will adhere to fiscal discipline.
— P. Chidambaram (@PChidambaram_IN) March 25, 2019
NITI Aayog Vice Chairman Rajiv Kumar, however, has sounded the alarm bells after the Congress made the announcement yesterday. He said that the fiscal deficit may actually increase from 3.5% to 6%. “All the credit rating agencies may bring down our ratings. We may not get loans from outside and eventually, our investments might be blocked,” he said
In 2008, P Chidambaram had increased the fiscal deficit from 2.5% to 6%. It’s the next step in that pattern. Rahul Gandhi today made the announcement without thinking about its impact on the economy: NITI Aayog Vice Chairman Rajiv Kumar on Rahul Gandhi’s NYAY scheme promise
— DeshGujarat (@DeshGujarat) March 25, 2019
He added how in 2008 when P. Chidambaram was the union minister of finance, the fiscal deficit had gone up from 2.5% to 6%. He added that the sops handed out by Congress President Rahul Gandhi was not a well thought out plan. An inevitable consequence of the dole would be that the middle class is likely to be forced to pay higher taxes to fund the minimum basic income only months after the Modi government reduced their tax burden. Inflation, which the current government has been successful in controlling, is also likely to shoot up.
Moreover, the minimum basic income could very well mean the end of all other subsidies. Common people will likely have to forfeit their subsidies on gas, fertilizers, electricity, crop prices and MNREGA. The Ayushman Bharat scheme which currently provides for free treatment of poor people in dire need of money may also have to be scrapped. In spite of all that, the promised dole provides for ample opportunity to scam the public and costs could very well escalate beyond what’s feasible.
Significantly, however, there doesn’t appear to be any agreement on the matter within the Congress party itself. While Rahul Gandhi says one thing, the chairperson of Data Analytics Department of the Congress party, Praveen Chakravarty, says something entirely the opposite. It appears there’s significant confusion within the Congress party itself on how it will be implemented.
One thing is for certain. Should the Congress come to power and the scheme, in whatever form, does get implemented, the greatest sufferers will be the middle class. The poor, too, will suffer as infrastructure will crumble and the cost of living will shoot up.