NYAY cannot be the final solution


The Congress has described NYAY as the final assault on poverty. Do you agree?

That claim is based on two assumptions that do not hold. One is that there is a reliable way of identifying the poorest households. The other assumption is that poverty is only a matter of lack of income. In fact, poverty is also about other deprivations such as lack of education, health care, dignity and so on. On both counts, NYAY cannot be the final solution. Having said this, NYAY could be part of a final assault on poverty, in the sense of a permanent social security system that protects people from deprivation.

Critics say it is sheer populism.

The term ‘populism’ is a little confusing. If it means squandering public money to buy votes, populism is certainly objectionable. But quite often, populism is used as a propaganda term to disparage social programmes that actually make a valuable contribution to poverty reduction and social equity.

At election time, it is natural for political parties to make promises aimed at getting votes. This is not a bad thing, as poor people have so little voice in ordinary times. The question is whether the promises are sensible and responsible. In the case of NYAY, I feel that the intent is serious and valuable, but the proposal is short on specifics. It is in that respect that there is an element of populism in it.

Questions are being raised about the fiscal prudence of the scheme.

Social spending in India is quite low by international standards and there is scope for raising it. Fiscal prudence calls for doing this in a responsible manner. This includes reducing regressive or wasteful subsidies, and taxing the rich, instead of deficit financing. The problem is that the privileged are good at defending their privileges.

The Congress claims that the scheme will jumpstart the economy.

An economy is not like a horse that can be jumpstarted, especially when it is already running. India’s GDP has grown at around 7.5 per cent per year in real terms for the past 15 years or so. That is pretty good and I doubt that the economy can grow much faster without an environmental disaster. As far as NYAY is concerned, I doubt that it will have a major impact on growth.