Despite having some ability to benefit a section of the economically worse off, the researchers say, it is mostly a “political stunt” and limited in its ability to tackle income inequality.
New Delhi: The Congress’ proposal of Nyay, a monthly payout of Rs 6,000 to the poorest 20 per cent, can be best served with “more progressive taxation,” which could include a wealth tax on the rich, says the Paris-based World Inequality Lab. And the BJP’s 10 per cent quota for the poor in the General Catgeory is a “political stunt.”
The institute has released a comparative study of the promises that the BJP and the Congress have made in 2019 to assist the poor as part of their election pitch.
While the Congress has not shared any details on the plan — its fiscal implications or its architecture — a paper by the Paris institute offers several financing options. Estimating the cost of Rs 72,000 annual income guarantee as Rs 2.9 trillion (1.3% of GDP), it says that a 2 per cent tax on total wealth on households owning more than Rs 2.5 crore of wealth (that is the top 0.1% of households) would yield Rs 2.3 trillion or 1.1% of GDP.
The paper’s authors are Nitin Bharti, research fellow, and co-director Lucas Chancel. Chancel is on the institute’s executive committee along with French economist Thomas Piketty whose work on inequality has set off widespread debate.
Asked if the institute helped the Congress formulate the plan, Chancel said: “Not directly. We discussed the scheme and shared our results with Abhijit Banerjee (Professor at MIT and Director of the Poverty Action Lab) who has been discussing it with the Congress but we haven’t been in direct contact with them.”
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