National

‘Unconditional cash transfer is a powerful idea’

G Balachandar Chennai | Updated on March 27, 2019 Published on March 27, 2019

Praveen Chakravarty,Chairperson of Congress’ Data Analytics Department   -  Bijoy Ghosh

The Congress has announced a scheme that promises to provide ₹72,000 per year to the poorest five crore families in the country if it comes to power. But questions abound on its efficacy and implementation. Chairperson of Congress’ Data Analytics Department, Praveen Chakravarty, who has been instrumental in preparing the scheme, spoke to BusinessLine about what it offers. Excerpts:

What do you intend to achieve through NYAY (Nyuntam Aay Yojana)? Is India ready for it fiscally?

An unconditional cash transfer is a powerful economic idea that’s been around for a long time. It is not a political idea. In 1938, there was a working committee meeting of the AICC in Gujarat. Subash Chandra Bose, then president of the Congress, said there must be some basic minimum standard of living for every Indian family and it is our responsibility to ensure that. He formed a committee to look into the matter and the chairman of the committee was Jawaharlal Nehru. They couldn’t complete the work as they were involved in Quit India movement. Of course, there must be fiscal capacity for an economy to be able to do this. We couldn’t do these 20 years ago or 10 years ago. Today, given the size of the economy, — ₹200 lakh crore — is ₹3.5 lakh crore for this scheme meant for the poorest 20 per cent too much? No.We have the fiscal capacity to do this and hence we are doing this scheme now.

How do you think States will be able to come on board given their tough financial conditions?

One must acknowledge here that every scheme must be a federal scheme. We must take the States along. Today, States get 42 per cent of the revenue pool that is divisible. My view, as an economist, is just a simplification of GST will alone lead to a tremendous tax buoyancy for the States and once that happens they have will enough capacity to implement NYAY.

What does this ‘simplification of GST’ mean?

It means a single rate with merit and demerit of course. Single rate doesn’t mean one rate and there will be plus or minus. It is a standard practice. Plus, some logistical improvements in GST, including filing and operation-related that we are suggesting will also help.

Have you sought expert opinion while devising this minimum income guarantee scheme?

It is now well known that we have talked to a whole bunch of economists. I think the world’s leading expert Thomas Picketty actually had a paper a couple of days ago talking about this scheme. Former RBI governor Raghuram Rajan has said it is beneficial. Former economic advisor Arvind Subramanian recommended this to the government three years ago. But the BJP chose demonetisation. This scheme is drawing attention because this is the first time a large economy is embarking on an initiative of this scale.

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Published on March 27, 2019
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