View: Congress' NYAY scheme is neither fair nor feasible
One concern is financial feasibility. NYAY pegs cost at Rs 3.6 tn —13% of govt expenditures in 2019-20 budget.
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 the difference between Rs 12,000 and its actual income. This gives rise to the second puzzle.