Asked whether existing subsidies will be removed for the new scheme — Nyuntam Aay Yojana (NYAY) — to be launched, Chidambaram replied in the negative.
The minimum guaranteed income scheme announced by the Congress will be rolled out in phases and will cost about 1.8% of gross domestic product (GDP) at any given time, senior party leader and former finance minister P Chidambaram said on Wednesday.
Asked whether existing subsidies will be removed for the new scheme — Nyuntam Aay Yojana (NYAY) — to be launched, Chidambaram replied in the negative. “Let me make it absolutely clear, subsidies which are granted to address specific social economic objectives will not be affected,” he said, addressing a press conference in Chennai.
Given that NYAY involves a cost of Rs 3.6 lakh crore a year once implemented fully, any move to retain existing subsidies on top of this will deal a massive blow to the Centre’s fiscal balance.
In an interview to India Today TV, former RBI governor Raghuram Rajan, who, the Congress claimed, was consulted on the scheme, said: “At this point if you ask me, given the way we are, can we add Rs 7 lakh crore, the answer is no. That is really what any sensible government, post election, will have to think about.” As such, the Congress has not laid out a roadmap on how to mobilise the extra resources to fund the largesse.
The Interim Budget for 2019-20 has earmarked a subsidy outlay of Rs 3.34 lakh crore for existing schemes. NYAY’s potential cost will inflate it to a massive Rs 6.94 lakh crore. As such, NYAY cost is reckoned to be about 13% of India’s budgetted expenditure of Rs 27.84 lakh crore for FY20.
Chidambaram said an expert committee would be set up to implement the scheme and it would have to be tested in the field before being rolled out. He added that enough data are available through crop insurance and other schemes to identify the 5 crore beneficiary families.
To attract voters ahead of the general election, Congress president Rahul Gandhi on Monday said 5 crore poor families will be given Rs 72,000 each a year under the NYAY if his party is voted to power. As many as 20% of families that are poor and 25 crore people will benefit from the scheme.
Gandhi’s scheme approximates a quasi universal basic income scheme conceptualised by former chief economic adviser Arvind Subramanian, except for the fact that latter’s model, as explained in an article he recently wrote with three others, was specific to rural India. Subramanian envisaged transfer of Rs 1,500/month to households, covering 75% of the rural population at a cost of around Rs 2.6 lakh crore.
The NDA government already announced in the interim Budget its plan to offer an annual Rs 6,000 cash support to small and marginal farmers under the PM-Kisan scheme, which would cost the exchequer Rs 20,000 crore this fiscal and Rs 75,000 crore in 2019-20 (when it will see a full-year implementation if the NDA comes back to power).