To Deliver True NYAY (Justice), Rahul Must Also Give UMMEED (Hope)

A massively deregulated economy is the flip side of NYAY and UMMEED can help in achieving it.

(Photo: TheQuint/Shruti Mathur)

Video Editor: Vivek Gupta
Video Producer: Anubhav Mishra
Cameraperson: Nitin Chopra

I absolutely endorse NYAY (Nyuntam Aay Yojana) or Minimum Income Plan, authored by Rahul Gandhi’s Congress as its big political idea for the 2019 polls. No, I’ve not become a leftist. I continue to be a card carrying right-of-centre economic liberal who believes in the power of well-regulated, competitive markets to transform lives.

Just look around – some of the richest free market economies also run the most powerful welfare programmes. There is no contradiction. I would in fact argue that there is an organic chemistry between the two.

Delivering NYAY Without Increasing Deficit

Now seriously, can NYAY be funded without throwing the fiscal deficit out of whack? While the Congress has yet to enumerate the blueprint, let me make an intelligent guess. This is just one iteration several variants will be possible.

To begin with, everything will not happen on day one. So if we assume that the rollout will be across 10, 20, 30 and 40 percent of the districts over Years 1 through 4, then the cash needed would be Rs 36,000, Rs 1,08,000 crores, Rs 2,16,000 crores and Rs 360,000 crores respectively.

There are two existing schemes which can justifiably be tweaked to realign them with NYAY. The first one is the food subsidy programme budgeted at Rs 1,84,000 crores. Now that today, covers 67% of the population. Since per capita incomes have risen substantially its coverage can be reduced to 50 percent. That would release almost Rs 50,000 crore for NYAY.

Also, MNREGA could guarantee 150 days per year – that's up from the current 100 days of employment to a NYAY beneficiary. Just these two tweaks could take care of the first 18 months without adding a penny to the fiscal deficit.

There are estimates that a tiny 1-percent wealth tax on households with assets of more than Rs 2.50 crore – just 0.1 percent of India’s households – could raise over Rs 1 lakh crore.

And finally, economic growth could cover the rest. Remember, India’s GDP is expected to grow from Rs 2 lakh crore to Rs 3.50-4 lakh crore over the next 4-5 years. Just that would garner the additional tax revenue required to fund NYAY.

That would keep the fiscal deficit at prudent levels.

Flip Side of NYAY: Massive Deregulation

So the key is massive deregulation to achieve double-digit economic growth. Rahul Gandhi should also launch the final assault on India’s draconian-ly regulated economy.

That is the flip side of NYAY. To undertake massive governance reforms such that entrepreneurship and wealth creation flourish. Nearly 90 percent of our GDP is produced in private enterprises but it is horribly strangled in red tape. I will give you just a few examples:

Corporate Restructuring Via Contracts
Why don’t we allow corporate restructuring via contracts as happens in several countries of the world? Which can be wrapped up in weeks. Why do our entrepreneurs have to waste years in court, paying ridiculously high legal fees?

Contradictory Guidelines From Regulators
Why do we have contradictory guidelines that force companies to violate one regulator or another? I will give you an example. SEBI guidelines may not allow founders to dilute while RBI guidelines slap penalties if they don’t. There is an example that we have of recently listed Bandhan bank. Or SEBI guidelines may force an acquirer to go above 51 percent while FDI rules prohibit that. That actually happens in the case of airlines.

Petrol Priced Freely but Entertainment is Regulated
Why do we control entertainment tariffs while petrol is freely priced?

‘Dividend Tax’ on Tax Neutral Mergers
Why does a company first get court approval for a tax-neutral merger, but then get hit by a demand of Rs 5,000 crore in “dividend tax” for the same transaction?

No Protection to 1st Generation Founders
Why don’t we allow our first-generation founders to issue equity with superior voting rights to protect them against Chinese and American raiders?

Harassment by ‘Anti-Profiteering Authority’
Why do we need an “anti-profiteering authority” to harass and force small businesses to pass GST benefits to consumers? Why don’t we trust competitive forces to achieve that?

The Draconian ‘Angel Tax’
Which country in the world taxes capital as income? And then calls itself an “angel”?

I can go on and on and on. There will easily be a million examples of such excesses which tie both the arms of our small business owners and first-gen entrepreneurs behind their backs, making them helpless against petty inspectors, overseas predators and big local sharks.

If NYAY is to succeed, Rahul Gandhi and Congress must also vigorously design and implement what I am calling, another acronym UMMEED, ie Unleash Mahatvakanksha (ambition) & Mojo via Exceptional & Energetic Deregulation.

NYAY and UMMEED should be treated as identical twins born to and nurtured by the same mother, ie a caring, sensitive and proactive Indian state. Together, NYAY & UMMEED have the potential to transform India.