A Question of Credibility

The Indian National Congress Party has promised to give Rs. 72,000 annually to 5 crore poor families if the party is voted to power as the final "assault on poverty", in their Election Manifesto released before the ensuing Parliamentary elections (NYAY (Nyuntam Aay Yojana scheme). The party’s concern for the poor and for wiping off poverty, which they could not do in spite of having been in power for several decades, is understandable and appreciable. At the same time, the announcement raises some concerns and issues of credibility as well.

The above electoral promise, if implemented, would entail an additional annual budgetary expenditure of Rs.3.60 lakhs crores. This is to be seen in comparison to India’s targeted fiscal deficit (excess of total expenditure of the government over the total revenue) of Rs.6.24 lakhs crores for the financial year 2018-19. The additional burden is more than 50% of the current fiscal deficit. This shows the extent to which the country which has been resorting to deficit financing will be additionally burdened, if NYAY is implemented. As is common knowledge, the fiscal deficit is being funded by various means including external borrowings, minting new currency etc. Inevitably introduction of additional taxes will also be a fallout of the complex process of higher deficit financing. Higher deficit financing would also always lead to higher inflation in any country.

The manifesto would have made more sense and got more credibility if the funding programme for such a colossal amount for implementing NYAY was also made public. The country would have appreciated if the manifesto had announced clear plans to fund the above amount through unearthing black money, which is several thousands times higher than Rs.3.60 lakhs crores. And strangely, there is no mention about any concrete plans to tackle black money (if there are any such plans at all) in the manifesto. Also, creation of more employment opportunities should have been dealt with in connection with NYAY.

It is sheer common sense for an ordinary citizen to expect the funding of such a mammoth poverty eradication programme through unearthing of unaccounted money in circulation instead of putting additional strain on an already bruised economy. India has enough wealth. Unfortunately a giant share of it is in the hands of a few in the form of unaccounted money, benami assets etc. It is this paradigm that every right thinking and honest Indian wants to be set right with priority. The NYAY scheme, if implemented, would also act as an incentive for not opting to work and not earning income on one's own.