The Congress in its manifesto has made a promise of remitting Rs 72,000 a year directly to the bank account of each of the poorest five crore (50 million) families if it comes to power. The scheme has been named Nunyatam Aye Yojana (NYAY), ie, minimum income guarantee scheme.
Given that Congress president Rahul Gandhi has promised that there will be no increase in tax for the middle class and no withdrawal of the existing major social welfare programmes, the question is, in what way can this be done?
The World Inequality Lab, a group of economists based at the Paris School of Economics, has predicted a probable way of getting the necessary fund. As the income inequality in India has reached an all-time high, it says that the rich should be taxed to fund the NYAY. A two percent tax on the total wealth on households owning more than Rs 2.5 crore of wealth would yield Rs 2.3 lakh crore, or 1.1 per cent, of GDP. This will affect only the top 0.1 percent of households and leave out 99.9 percent households.
This is not only the probable way but the best way of doing it. The super rich of our country are taxed much less than their counterparts in other countries that have achieved high ranks in human development. Moreover, inequality is much higher in India. According to the 2019 Oxfam Inequality Report, the wealth of the top nine billionaires in India is equivalent to the wealth of the bottom 50 percent of our population. Imagine, a balance can now stand in perfect equilibrium, holding only 9 Indians at one end and 67 crore Indians at the other!
In such a scenario, a little more tax for the super rich will bring justice and equality. Moreover, even the rich will be benefitted by this scheme. Extra money in the hands of the rich will go to either Indian or foreign banks. But for a poor family, whose family income is less than Rs 12,000, the extra amount of Rs 6000 per month will go straight to the market and benefit the market players. The NYAY money would act as a bridge between the surplus farm production and the hungry malnourished Indians. Thus, it would bring smiles on the faces of the farmers and the poor people of our country.
Well-known economist and former RBI governor Raghuram Rajan says that the NYAY is doable, and that it is well worth thinking about such a scheme. He says it is a misreading of the scheme by the critics who claim that it would make people not work at all. On the contrary, this scheme would indeed energize the poor people of our country with confidence, nutrition and motivation to fight depression, malnutrition and widespread diseases like anaemia and tuberculosis.
It would be a good idea to directly transfer the money to the bank account of a female member of a family, as far as possible. This would minimize the money going to the alcohol market as only 2 to 5 percent of Indian women consume alcohol and Indian men use alcohol 9.7 times more than Indian women.