NYAY Scheme Feasible But With Certain Conditions, Say Economists

The Congress’ promise to guarantee a minimum income of Rs 12,000 a month to the poorest in the country under the NYAY scheme, if voted to power, has drawn both applause and apprehensions. While the need to support the poor is undisputed, doubts have emerged on whether it is fiscally possible and feasible to implement such a scheme.

Speaking to BloombergQuint, economists opined that it is possible to undertake sucha a scheme, provided it takes into account certain crucial aspects.

Radhika Pandey, Economist at the National Institute of Public Finance and Policy said that the details of implementation of the scheme are yet not clear, even as she said it is a better option than implementing farm loan waivers.

“Targetted schemes like these are less distortionary than farm loan waivers but a number of aspects have not yet been clarified. It is not clear that the income cut off for the beneficiaries is Rs Rs 72,000 per annum or Rs 6,000 per month.

She also said that it will be difficult for the government to identify the targeted poor as there is no credible database on income levels.

Madan Sabnavis, Chief Economist, Care Ratings however said that the question of identification should not bog down the scheme. “Once the scheme is in place, we can find a way,” he said.

He further backed the scheme saying: “At a a time when we are looking to curtail public sector, it is difficult for government to provide jobs. So, if the scheme is targeted well, it can alleviate poverty.

On the question of whether other existing schemes will be subsumed in order to implement this scheme, Narendra Pani, Professor at the National institute of Advanced Studies said there has to be discretion.

“You cannot replace something like MNREGA, because then the earning from MNREGA will go down and you will hve to pay all the more under this scheme. So, it has to be seen how much the family is getting from the government already and then provide a op-up to meet the cut-off mark,” Pani said.

Pandey said that the scheme should not come at the cost of other productive investments.

“We need to see that we not sacrifice other productive investments, like cutting infrastructure spending and undermine the fiscal trajectory, which will eventually lead to higher interest rates and in the long run, harm the poor the most,” she said.