Edit: This article was first published on 28th April, 2019.
Indian-American economist Abhijeet Banerjee has been awarded the Nobel Prize for Economic Sciences. Banerjee had assisted Rahul Gandhi before 2019 Lok Sabha elections. He had suggested NYAY scheme which is nothing short of a glorified MGNREGA.
Rahul Gandhi is trying to be ‘Robber Baron’ to win the 2019 general election. He said that if Congress comes to power the government will forcibly take the money from businessmen to fund NYAY, the direct cash transfer scheme which is the main poll plank of the party.
Earlier Sam Pitroda, one of the most powerful people in the Congress party has admitted that the burden of the NYAY scheme will fall on the middle class. When asked whether taxes will not go up and whether the middle class will be affected by it, Pitroda said, “Taxes may go up but I do not think that’s a major issue”. In the very next sentence, he went on to speak in a condescending tone about the middle class and asked them to not be selfish. He stressed, “Don’t be selfish, have big heart,” in a very demeaning and insulting manner.
The NYAY scheme of Congress party would cost around 3.6 lakh crore rupees or 14 percent of total government expenditure. It would cost around 2 percent of GDP and the central government’s net collection is around 10 percent of GDP. To increase the tax to GDP ratio by 2 percent, the Congress party will bomb the middle class and businessmen with taxes. Congress has been reluctant to admit that the scheme would be financed by raising the taxes on the middle class. However, after the interview of Pitroda, who is a close aide of Rahul Gandhi, it is very clear that the taxes on the middle class would be increased exponentially to source the money for the scheme.
Economist Abhijit Banerjee, the brain behind Congress’ NYAY scheme has admitted that the taxes on middle class would be increased to fund the scheme. In an interview with Rahul Shivshankar of Times Now he categorically said, “No NYAY without tax increase.” In another interview with Rajeev Dubey of Business Today he said that there is scope for direct as well as indirect tax increase. When Banerjee was asked what taxes should increase and what are the new taxes that can be imposed, he said, “Income taxes. In principle, there’s scope for wealth taxation and in some sense there’s scope for increasing GST.”
The World Inequality Lab, an institution based in Paris School of Economics is also providing the intellectual support for the implementation of the scheme to Congress party. French economist, Thomas Piketty who has been popularly called ‘Karl Marx of twenty-first century’ is among the directors of World Inequality Lab. Piketty is known for recommending ‘revolutionary’ measures to reduce inequality. He recommended that the state should rob the middle class to finance the welfare scheme for poor people. He recommends a top income tax rate of 80% and a next-to-top income tax rate of 50 to 60% to increase the tax to GDP ratio.
The idea of Rahul Gandhi of forcibly taking the money from businessmen is very dangerous for the economy of the country. It is a reinforcement of the anti-corporate stance of Congress party which kept the country poor for decades. Congress party has repeated the same stance at the time of election to win the votes of poor people. However, after winning the election, the party steps into crony capitalism and rewards the corporates which helped to win the election.