NYAY, an idea whose time has come: Praveen Chakravarty

The Nyuntam Aay Yojana (NYAY) is simple. The poorest five crore Indian families will get Rs 6,000 a month or Rs 72,000 a year. They get the same amount of money – every one of these five crore families. What it means is that today, on an average, the monthly income of the poorest Indian (the 20% of Indian families) is about Rs 6,000. So, we will give them an additional Rs 6,000, so their average income then becomes Rs 12,000. That is why we are saying that the minimum income line in India will become Rs 12,000 after the NYAY scheme. That doesn’t mean we are giving Rs 12,000; we are giving Rs 6,000. This will benefit about 25 crore people.

At its peak, NYAY will cost Rs 3.6 lakh crore, which is 1.8% of today’s GDP. The NYAY scheme will be rolled out in phases. By the end of the second year, we will cover all the five crore families. By that time, the GDP will grow. So, at its peak, it would be between 1.2% to 1.5% of GDP, which is actually not a large sum because India’s GDP today is Rs 200 lakh crore. States and Centre combined spend Rs 60 lakh crore already. We are talking about Rs 3.6 lakh crore for the poorest 20% in the country. It is very easily doable. The money is there.

Honestly, I think NYAY, as an economic idea, is a well-accepted idea around the world. The scepticism around the fiscal impact and what it will do to our fiscal balance as well as some apprehension around implementation is there, but I don’t think we should worry about it too much.

As former Union Finance Minister P Chidambaram says, there was similar scepticism around MGNREGA when it was launched 10 years ago. I understand why people are apprehensive; I wouldn’t call it scepticism or criticism. But, this was an idea that was first proposed in the Indian context by this government’s former Chief Economic Advisor Arvind Subramanian. He had argued that the time had come for India to adopt a basic minimum income.

The only difference is that Arvind’s proposal was to give Rs 1,500 a month to 15 crore families; it is our political call to say that 25 crore Indians to escape the poverty cycle will need a significantly larger amount than a mere Rs 1,500. Hence, we said we would give a larger sum to the poorest 20%. That is the difference

The identification issue is a little overblown in my view. The fact of the matter is that there are several government schemes already, such as the Ayushman Bharat Scheme, which are for 10 crore poorest families. How do they identify these families? How do we identify people for PDS and other schemes which are already in place?

There has been a lot of advancements in data science as well as new data sets which are available that make it easier today to identify the poorest five crore families in India which was impossible to do even 10 years ago. So, I do think it is possible to identify the poorest families.

These five crore families will be identified wherever they are. This scheme does not distinguish between urban poor or rural poor, landed poor or landless poor, poor belonging to a certain caste versus poor belonging to another caste. It does not distinguish between any.

Migrant labourers will be identified. We do have other things like Aadhaar that is national. Even if people migrate, that Aadhaar number is portable. It will not be dependent on the Aadhaar. But, we are still at the manifesto stage and we are not writing the Cabinet note for implementation. There are so many questions being asked of us, but when Ayushman Bharat was announced or even today, no one knows how it works; or when the Prime Minister says I will double farmers’ income, till today nobody knows the maths.

I don’t think the two are mutually exclusive. It’s not that you do one and you can’t do the other. The simple reason of ‘why are we doing this’, it is now clear world over that economic growth does not translate into real incomes and livelihoods for the poorest and the weakest sections of the society.

The trickle-down benefits of economic growth is a little exaggerated. It does not reach the bottom most. And for this, you need a direct policy intervention for the poorest. That is what this is about.

You give them cash, which is unconditional in nature; direct, because it then gives them the freedom, choice, dignity, self-respect. This allows them to participate in the mainstream economic activity that is available for the remaining 80% of the population. Hence, they will also then get the chance to play in this playground. Right now, they are being excluded from this playground.

The money will be transferred into the bank accounts of the woman head of the household. It is now well-established that women make better decisions for the family than the male in the family. It is also well-established that money in the women’s account does lead to more productive outcomes and uses. Hence, the choice.

We are calling it the Remonetisation of the Indian economy or as I call it - ‘notewapsi’, because we are putting the money back in the hands of the people. Now, again I want to say, the two are not mutually exclusive.

Putting money back in the hands of the people does not preclude us from investing in infrastructure, education and healthcare. We have made it categorically clear that we are not going to touch any of the existing core programmes, including in health, education, MGNREGA, food, fertiliser programmes. So, I don’t think they are mutually exclusive of each other.

There is a lot of presumption here that you would need an income certificate and all of those things, but one doesn’t need it. I think apprehension is healthy. I am very happy to be held to high standards and asked all these questions, but I do think it is premature to talk about all of these now. These issues of corruption, identification to me sounds like an excuse, an alibi not to do what is right. That is to wipe out the last remains of poverty in India.

At the time of Independence, 70% of India’s population was poor. We have done spectacularly well to bring that down to 20% today. Now, it’s time to remove the last remaining 20% poverty.

An expenditure of 1.2-1.5% of GDP is not enormous in today’s India because this is pretty much what the Arvind Subramanian proposal also talked about. The question about how we will raise the revenue or how we will raise the money for this – is it through some additional revenue streams or through rationalisation of some expenditure – will be answered.

We have said already that it would be a federal scheme, a Centre and state scheme. The Congress president has also committed that we will be fiscally prudent. It is our belief that it is possible to find the money for the scheme through a combination of various methods, including increased revenues, rationalisation of finances, involvement of states and a boost that we can get from overall economic growth.

Again, like I said, we are getting into too much of detailing. We are not writing a Cabinet note for implementation. We are at the manifesto stage.

Do you have a message for Mr Arun Jaitley who believes NYAY is a bluff, that poverty levels are decreasing for the first time, that experts you consulted like Dr Raghuram Rajan are politically motivated? Dr Arvind