After Congress President Rahul Gandhi proposed his new freebie scheme Nyuntam Aay Yojana (NYAY), economists around the world have expressed their skepticism over the fiscal prudence of the scheme.
Arvind Panagariya, a noted Economist and former Vice-Chairman of NITI Aayog, has viewed that the promise of the Congress party to implement a minimum income guarantee scheme would be “almost impossible”. Panagariya further added that NYAY scheme announced by the Congress president Rahul Gandhi will have a huge fiscal impact as it would cost about 13 percent of the Union Budget, even greater than the defence budget.
“If you are giving Rs 72,000 per annum to 5 crore families then there will be an expense of Rs 3.6 Lakh crore. This is 13 percent of the total budget of the central government. No one has given details of the scheme that how Rs 3.6 Lakh core will be arranged to implement it. It’s more than our defence budget. The fiscal situation is always tight. It’s almost impossible to take out 13 percent of the budget,” news agency ANI quoted Panagariya.
The Congress has promised to provide cash support to the poorest 20 percent households of the country if it is voted to power in the upcoming Lok Sabha elections. The party promised to target five crore families or 25 crore individuals as beneficiaries of the scheme.
Interestingly, Economist Abhijit Banerjee who is advising the Congress party on the formulation of the scheme had made some startling revelations regarding the rationale behind the scheme. In an interview with Times Now, Banerjee said that the NYAY will have to funded by new taxes. He said that at present India’s fiscal deficit is so large that the scheme is simply not sustainable without raising taxes.
Abhijit Banerjee also said that the implementation of NYAY will mean that lots of current welfare programs will have to be scrapped. He said that many of the current schemes have no purpose, and nobody knows what their purposes are, and they will be replaced by NYAY.