Economic Times ⁽²¹⁸⁾

One concern is financial feasibility. NYAY pegs cost at Rs 3.6 tn —13% of govt expenditures in 2019-20 budget.Read full article Congress’ minimum income scheme, Nyuntam Aay Yojana (NYAY), raises several puzzling questions. Congress president Rahul Gandhi stated his party worked on the scheme for six months and consulted ‘all big economists’, including former RBI governor Raghuram Rajan. But, so far, none has satisfactorily answered any of these questions. Normally, a cash transfer scheme offers identified beneficiaries a fixed amount of cash. Once beneficiaries have been identified, you transfer the stipulated sum to them. But NYAY adds a twist to this standard scheme. It additionally guarantees every family a minimum income of Rs 12,000 a month. The first puzzle is whether the scheme would identify all those families with monthly income below Rs 12,000 and uniformly transfer Rs 6,000 a month to them. If yes, then for families with incomes exceeding Rs 6,000, the scheme would overshoot the target income. Why subject the taxpayer to this extra burden? An alternative would be that the scheme would give each identified beneficiary family…

For poorest beneficiaries, the transfers under PM-KISAN make a significant contribution to their purchasing power.Read full article The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme will transfer annually Rs 6,000 to every small and marginal farmer. Many in the Opposition have criticised the scheme, arguing that it offers too little to be of real help to farmers. Congress president Rahul Gandhi went as far as describing the scheme as “an insult to everything [farmers] stand and work for”. This denunciation is largely political. When in power, the UPA government had put in place a subsidy under the National Food Security Act (NFSA) that was roughly equal to the transfer under PM-KISAN on a per-beneficiary basis. One may rhetorically ask, was this subsidy, too, an insult to its beneficiaries? To those steeped in the elite culture of Lutyens’ Delhi, almost any transfer that is feasible within India’s tight fiscal constraints appears laughably low. We are reminded of the acrimonious debate on the Tendulkar poverty line in 2011. One commentator had argued then that at this poverty line, he could not even buy…

Read full article In one important respect, Budget 2019 breaks new ground. For more than a decade, I have argued that apart from a compelling reason for an alternative scheme, social spending must take the form of cash transfers. Such transfers empower the beneficiary rather than bureaucrats and agencies that get hired to distribute in-kind transfers. Armed with the cash, it is the beneficiary who chooses what to buy and from whom. Yes, up to 5% beneficiaries may blow up the money on liquor, but that is no reason to punish 95% responsible citizens. Therefore, it is heartening that for the first time in India’s history, a government scheme has recognised the sovereignty of the beneficiary. Under the newly announced PMKISAN programme, GoI would unconditionally transfer in cash a sum of Rs 6,000 a year to each of 125 million marginal and small farmers. GoI has allocated a solid Rs 750 billion for this purpose in the interim budget. If the idea of cash transfers gains further acceptance, India can make huge gains in terms of beneficiary welfare, as well…

Patel was piloting the bank system from chaos to order, his successor must take up the taskRead full article It was with great sadness that I woke up to the news of resignation by RBI governor Urjit Patel this Monday morning. Urjit has been a friend for more than two decades and I have greatly admired him for his brilliance, professionalism, integrity, conviction and friendship. With his departure, India has lost a committed public servant. It is a rarity that a resignation, tendered amid policy differences with the government, elicits such a warm response from none other than the PM. In an unusual gesture, not only did Prime Minister Narendra Modi extol the governor for his thorough professionalism and integrity but also applauded him for steering “the banking system from chaos to order”. Patel earned this high praise through sheer hard work and principled policy making. He inherited from his predecessor an extremely fragile banking system. Years 2008 to 2014 had seen an unfettered expansion of credit by public sector banks (PSBs), with the RBI failing to deliver on its key…

Read full article With the passing away of Thirukodikaval Nilakanta Srinivasan, ‘TN’, the world has lost a true scholar. Intellectually, TN was as formidable as his full name. Personally, he was kind to one and all. He lived his entire life for scholarship —and for a little bit of Carnatic music. Bangladeshi economist M G Quibria, who studied with me at Princeton, used to describe TN as India’s Paul Samuelson. He opined that like Samuelson, TN had complete mastery of mathematical techniques and wrote simultaneously in a large number of fields including international trade, development economics, public finance and econometrics. No Jumbled Numbers… At one level, this was not surprising. Before he did his PhD in economics at Yale, TN had done his BA (Honours) and MA in mathematics, and then received two years of professional training in statistics at the Indian Statistical Institute (ISI), Kolkata, from none other than P C Mahalanobis. At Yale, TN wrote his thesis under the direction of Tjalling Koopmans, the 1975 Economics Nobel laureate. TN returned to India in 1964 and joined the Planning…