Relevance: GS Paper III (Economy)
Why has this Issue Cropped Up?
The Congress party has promised to transfer ₹6,000 a month to poor households if it comes to power. This income transfer scheme has been named Nyuntam Aay Yojana (NYAY).
The Hurdles to Implementation of a Proposed Scheme like NYAY
- The fiscal expenditure, to transfer ₹72,000 every year to the poorest 20% of the approximately 25 crore Indian households, would be ₹3.6 lakh crore.
- This amount is twice the estimated amount set aside for food subsidy and five times that for fertilizer subsidy in the 2019-20 Union Budget.
- There is also the additional problem of the identification of the poor — the Socio-Economic and Caste Census of 2011 is the most comprehensive exercise for this, but it has been riven by reliability and authenticity issues and has only been partially released to the public as yet.
- By having an inbuilt provision of targeting the beneficiaries, NYAY can fall short as other programmes have, such as the targeted public distribution system.
Not an Unsound Idea
- The idea behind NYAY is not entirely unsound. An unconditional transfer of a specified minimum income support to the poor will go a long way in helping address immediate needs related to health, education and indebtedness.
- A large section of the targeted poor would include landless workers and marginal farmers in rural areas, and unemployed youth in families engaged in menial labour in urban areas.
- Besides shoring up income to meet such basic needs and pushing wages upwards, the transfer scheme can help spur demand and consumption in rural areas in particular.
- A section of the beneficiaries could withdraw themselves from employment but this could be mitigated by the expected overall spur in demand in the economy through consumption, and by the rise in real wages consequent to the shrinking of the labour market.
- Limited cash transfers in the form of direct farm income support in States such as Telangana and Odisha have helped ameliorate agrarian crises. This was the reason why the central government came up with the PM-KISAN Yojana as a countrywide scheme.
Conclusion
A massive programme such as NYAY requires much more homework for its implementation. A dole is not a magic bullet; it can only be one among a clutch of robust and prudent welfare policies.
