Former Finance Minister P Chidambaram says there are a number of measures and ideas on the table to fund the game changing ‘Minimum Income Guarantee’ for the poor promised by Congress President Rahul Gandhi.
An increase of even 1% in the tax to GDP ratio, he points out, will yield ₹2 lakh crore.
Here are his replies to a number of doubts that National Herald mailed to him:
Given the current economic and fiscal conditions which are dismal, is the Minimum Income Guarantee (MIG) Scheme feasible? If yes, how?
The Minimum Income Guarantee (MIG) Scheme is feasible and we are confident that we can implement it. Remember, we successfully implemented a nationwide loan waiver in 2008. In the three states that the Congress won recently, we are in the process of implementing a farm loan waiver scheme.
Will it not raise the fiscal deficit significantly? How is the Congress planning to prevent that should they come to power in 2019?
It will not increase the fiscal deficit. We will observe fiscal prudence. Given the size of our GDP and the size of the Annual Budgeted Expenditure, we are confident that we can find the resources for the Scheme.
Will introduction of the scheme affect older running programmes like MGNREGA, MSP for farmers, PDS? If yes, how?
Each programme has its objectives. As long as those objectives are valid and the particular scheme is fulfilling the objectives of that scheme, it will continue. Some schemes do outlive their utility.
It seems the scheme is aimed at boosting rural consumption by remonetising the poor? Is that the real aim?
The scheme will cover both rural and urban poor households. Hence, there will be a general rise in consumption among the poor which is desirable and good.
Is this aimed at those below the poverty line? What benchmark will be used to determine who’s poor? Will there be separate cut-offs for the rural and urban poor?
Based on updated and latest data available in June 2019, we will evolve the criteria to identify the poor households in the country. Each poor household will receive a measure of support in order to bring the current income of that household to the desired minimum level.
What new revenue streams can be explored to fund a scheme of this size and spread?
There are many ideas on the table. For example, if the tax to GDP ratio increased by just 1 per cent, that will yield an additional revenue of ₹2,00,000 crore.