The NYAY (Nyuntam Aay Yojana) minimum guaranteed income scheme announced by the Congress in its poll manifesto should not be taken as the miracle solution but supplemented by a total package of social, educational and fiscal measures to address inequality and poverty, French economist Thomas Piketty has said.
“NYAY can be one element of the entire package for setting up a fair distribution of wealth and a model for sustainable and equitable development,” Piketty said, adding that the Indian elections are of global importance since policy decisions being debated in India have repercussions across the world.
“Obviously not everything in the garden is rosy in the biggest democracy in the world. The country’s development is marred by huge inequalities and poverty which is too slow in declining. One (of) the principle innovations of the electoral campaign, which is ending, is the proposal made by the Congress party to introduce a system of basic income, the NYAY … As always with proposals of this type, it is important not to stop there and not take the basic income as a miracle solution or a final settlement,” Piketty wrote in a blog in French newspaper Le Monde.
“The cost would be significant, a little over 1 per cent of gross domestic product, but not prohibitive,” he said.
“This scheme should be supplemented with investments in health and education.” Congress has announced to give Rs 6,000 per month and per household (Rs 72,000 per year), for the poorest 20 per cent of Indians.
In India, public expenditure on health has stagnated at 1.3 per cent of GDP between 2009-2013 and 2014-2018, and the investment in education even fell from 3.1 per cent to 2.6 per cent, Piketty wrote, quoting a study.
“A complex balance remains to be found between the reduction in monetary poverty and these social investments which condition the closing of the gap between India and China. China has found a way to mobilise greater resources to raise the level of training and health of the population as a whole,” he wrote.
Piketty noted while NYAY has the merit of stressing the questions of redistribution and of going beyond mechanisms of “quotas” and “reservations”, its biggest drawback is that Congress has chosen to remain very discreet about its financing.
Lack of clarity on NYAY’s financing is “a pity because it afforded an opportunity to rehabilitate the role of progressive taxation,” (which meant levying higher taxes on the rich), he said.
Putting minimum guaranteed income at the Centre of India’s elections, Piketty said the real issue at stake in these polls is the constitution of a left-wing coalition, both egalitarian and multi-cultural, in India.
“This time, this may not be enough. The Congress, which was formerly the hegemonic party from the centre, is still led by the far from popular Rahul Gandhi (from the Nehru-Gandhi family) whereas the BJP had the sense to adopt Modi, for the first time a leader from humble origins. Congress fears it may be outflanked and lose the control of the government if it were to launch into an over-explicit coalition with parties to its left,” he wrote.