NYAY is undoubtedly a potential game changer, but communication the key

Last year, Abhijit Banerjee, professor of economics at Massachusetts Institute of Technology, delivered a lecture at the London School of Economics. He expanded on an experiment carried out by him in an assembly constituency in India, wherein he established that if a political party genuinely explained and urged an electorate to vote for development rather than on a caste basis, they are likely to do so. Then, in answer to a question, he effectively said, it is imperative to have Congress back in office in India. 

Banerjee was among over a dozen internationally renowned economists consulted by Praveen Chakravarty, chairman of the Congress party’s Data Analytics Department, to construct the Congress’ Minimum Income Support Programme or NYAY. The list includes Raghuran Rajan, Montek Ahluwalia and Frenchman Thomas Piketty. It is reliably gathered Arvind Subramanian was thinking on similar lines before he quit as chief economic adviser to the Narendra Modi government. Other eminent academics cannot be mentioned because of the posts they currently occupy. One of them said: “It was not my idea, though I talked through some options with Praveen Chakravarty, who is my main contact.” 

At the first meeting of the Congress manifesto committee in the autumn of 2018, P Chidambaram, who headed it, is said to have asked: what is one big pledge the party could make to the electorate? NYAY was the answer; and Chakravarty, who worked closely with Chidambaram, was entrusted with the responsibility to talk to experts to ascertain its viability. 

It was estimated a family of five under the poverty line earned an average of Rs 6,000 a month where the basic requirement was Rs12,000. It was, therefore, concluded such a unit required a top up of Rs 72,000 a year to lift it out of deprivation. Given the fact that there are five crores of such families, it will ultimately cost the Indian exchequer £36 billion per annum. Going by the Congress manifesto, a phased roll out will begin in the financial year 2020-21 and will cost 1% of GDP in Year 1 and 2% of GDP from Year 2 onwards. Logically, this figure should diminish as people get gradually lifted out of abject poverty.  

In 2018-19, Britain – with a population of less than 5% of India - spent £124 billion on its National Health Service. In the current financial year, the UK has allocated £44 billion for just school education. In short, notwithstanding India being a developing country, the outlay for NYAY is not unaffordable for India. Besides, the money disbursed is bound to be spent, thus returning to the economy, not to mention revenue from GST. 

The Congress manifesto says, “The scheme will be funded through new revenues and rationalisation of expenditure.” A member of the manifesto committee explained, what this means is around 11 core handouts out of 100 odd subsidies will be retained, while the rest will be streamlined and the efficiencies achieved thereby will be poured into the NYAY pool.      

NYAY is undoubtedly a potential game-changer, if Congress can convince beneficiaries about it. Indeed, theoretically, it could make a difference in up to 300 Lok Sabha constituencies, where significant numbers of voters would gain from the income guarantee. These include 67 in Uttar Pradesh, 40 in Bihar, 30 in West Bengal, 26 in Madhya Pradesh, 22 in Andhra Pradesh, 20 in Rajasthan and 19 in Odisha.

However, Congress is obviously not at present a central player in the cited states, barring Madhya Pradesh and Rajasthan. So, will voters of a caste or community orientation or with an inbuilt antipathy towards the Congress be so impressed with NYAY as to alter their voting pattern?    

In smaller states, which have high levels of poverty, such as Telengana (eight constituencies), Assam (13 constituencies), Jharkhand (12 constituencies) and Chhattisgarh (nine constituencies), NYAY could become a factor. It probably will in the last two mentioned. The litmus test, though, will be in the other two. 

In the battleground state of Maharashtra – second only in size to Uttar Pradesh – and Karnataka, the only southern state where the Bharatiya Janata Party has a foothold, 11 and 13 constituencies respectively are on the NYAY radar. Persistent drought in the former may have, in fact, increased the number of takers in it.         

Congress is in play in approximately 600,000 of the one million polling booths nationally. It claims to have an average of 11-12 workers per booth. In one village, where NYAY could make a material difference for 110 households, it has 48 such activists. But the short space of time between announcing the benefit and spreading the word is a challenge. So, has Congress managed or is managing to persuade the concerned 16-17% of voters in its favour? 23 May will tell.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel