Congress’ NYAY scheme – workable?

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I admire Prof Abhijit Vinayak Bannerjee for his honesty when he categorically says that NYAY comes with an added fiscal burden. Even if you can with some degree of accuracy identify these poor households,

1. you need to find Rs 360,000 crores. You can choose to borrow and your fiscal deficit goes up to 5.1% of GDP. We did this during UPA II and got record inflation (but Prof Bannerjee is OK with this).

2. You can finance this equally by corporate tax hike (which will rise to approx 40%) and income tax hike (with marginal rates rising to approx 55-60%) ceteris paribus.

3. Or you end the bulk of your schemes and subsidies to part fund this.
You will end up with much higher inflation or and much higher taxes.

And therefore I also admire Prof Jayati Ghosh (who taught me in JNU) when she sets aside her animus against the present government and honestly evaluates dismisses in one sentence- that the plan is unworkable.


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