Lack of Clarity on NYAY's Financing Its Biggest Drawback, Says Economist Thomas Piketty

New Delhi: French economist Thomas Piketty on Wednesday said the NYAY scheme proposed by the Congress as its mega poll promise could not be the final settlement and needed to be supplemented by social, educational and fiscal measures as well.

“With proposals of this type, it is important not to stop there and not take the basic income as a miracle solution or a final settlement. Setting up a fair distribution of wealth and a model for sustainable and equitable development, requires the backing of a total package of social, educational and fiscal measures, the basic income only being one element therein,” Piketty wrote in his blog.

The economist noted that while NYAY has the merit of stressing the questions of redistribution and of going beyond mechanisms of “quotas” and “reservations”, its biggest drawback is that Congress has chosen to remain very discreet about its financing.

Lack of clarity on NYAY’s financing is “a pity because it afforded an opportunity to rehabilitate the role of progressive taxation,” (which meant levying higher taxes on the rich), he wrote.

“Above all it would have provided an occasion for more explicitly coming closer to the new alliance between the socialist parties and the lower castes (SP, BSP) who propose the creation of a federal tax of 2 percent on net worth over 25 million Rupees (1 million Euros in parity of purchasing power), which would bring in the equivalent of the amounts required for the NYAY, and strengthen the progressivity of the federal income tax,” he wrote.

Putting minimum guaranteed income at the centre of India’s elections, Piketty said the real issue at stake in these polls is the constitution of a Left-wing coalition, both egalitarian and multi-cultural, in India.

“This time, this may not be enough. The Congress, which was formerly the hegemonic party from the Centre, is still led by the far from popular Rahul Gandhi (from the Nehru-Gandhi family) whereas the BJP had the sense to adopt Modi, for the first time a leader from humble origins. Congress fears it may be outflanked and lose the control of the government if it were to launch into an over-explicit coalition with parties to its left,” he wrote.