Praveen Chakravarty
Why NYAY?
What is happening world over, and in India, is that headline economic growth is not translating into incomes for people at the bottom-most rung. It is important for the government to directly reach out to the poorest sections and provide them a basic minimum income to assure them dignity and self-respect.
We have done fantastically well in the past 70 years to bring poverty down from 70 per cent to 20 per cent. Now, to completely eradicate poverty, we need a final assault on that 20 per cent.
How did you reach the figure of Rs 72,000?
We started working on this three to four months ago. We started by collecting data sets to find out the state of India's poorest—how much they earn, what their assets are, what their consumption is. Based on that, we realised that the average income of 20 per cent of India's poorest families is Rs 6,000 a month. Nobody earns zero. At the very least, there is MNREGA. We looked at poverty lines and came to the conclusion that [the amount] for a family to live a decent living in 21st century India is Rs 12,000 a month. So, for the poorest 20 per cent, the gap is Rs 6,000 a month. Hence, we came up with Rs 72,000 a year.
How will the poorest five crore households be identified?
There are various datasets and data analytical tools available. And we have always had a policy of identifying and targeting beneficiaries. We do that in the public distribution system and in MNREGA. And in this government's own recent Ayushmaan Bharat scheme, how are the ten crore beneficiary families being identified?
How long will the scheme take to wipe out poverty?
We hope that by the end of five years, once we have rolled out the scheme in full, we would be able to at least halve the number of poor people under that line. If implemented well, this has the potential to wipe out poverty in India in less than a decade.
Critics say NYAY will increase the financial burden on the exchequer.
We must first acknowledge that currently, India is a Rs 200 lakh crore GDP that spends Rs 60 lakh crore, the Centre and states combined. At its peak, this scheme will cost Rs 3.6 lakh crore. Are we saying that India cannot afford to spend Rs 3.6 lakh crore for our poorest 20 per cent?
It is being said that taxes will have to be increased to fund NYAY.
There are two strong pillars to this scheme. One is social justice for the poorest 20 per cent. The second is fiscal prudence. We will have to operate within this framework. Now, does that mean taxing the super rich? Does that mean raising more revenue? Does that mean rationalising some of the non-core expenditure? All of those are details we will have to work out.
Broadly, this scheme will not cost more than 1.5 or 1.6 per cent of the GDP at its peak, which is exactly what Arvind Subramanian proposed way back in 2017. What other economists and Arvind Subramanian proposed earlier was to give smaller amounts to a larger number of people. We have chosen to give a much more meaningful amount, but to the poorest 20 per cent.
Would this require a re-look at the existing subsidies?
We have categorically said that the core subsidy welfare programmes, which are food subsidies, fertiliser subsidies, fuel subsidies, health expenditure, education expenditure and MNREGA, will not be touched. It is our belief that with a combination of increased tax revenues and some rationalisation of non-core expenditure, we will be able to find the money to fund this. Also, it will be a federal scheme, so the states will be joining in.
Is this the biggest idea to come forth in these elections?
Not just in these elections. If I were to look at just the commentary over the past few days, in international and Indian circles, it certainly sounds like it is a new idea for the country.