Nyay Scheme & its impact on Indian Economy

By Naveen Singh|Updated : May 22nd, 2019

India is taking baby steps towards a Universal Basic Income (UBI) variant. First, in response to the widespread agitation of farmers, the central government announced the PM-KISAN scheme to provide farmers with an amount of Rs. 6000 per year to those holding less than two hectares of land.

Next comes the Congress Party's Minimum Income Guarantee Scheme (MIGS or NYAY) which was announced just a few weeks before the general election, which promises to pay Rs 6,000 a month to the poorest 20% household. If implemented let's read about its possible impacts.

Nyay Scheme & its impact on Indian Economy

Indian Economy – Current Scenario

As per economists, India’s economy is a developing mixed economy. It is ranked seventh in the world's largest economy by nominal GDP.

India ranks 133rd in per capita nominal GDP with $2198 per capita income as of 2019.

After the 1991 economic liberalisation, India touched 6-7% average GDP growth every year. Since 2014 (except 2017), India's economy has been the world's fastest-growing major economy, surpassing China.

Despite being the fastest growing economy, India has been still struggling with issues like poverty and unemployment and disparity in income distribution.

The unemployment rate In India measures the number of people actively looking for a job as a percentage of the labour force.

The data for 2017-18 from the National Sample Survey Office (NSSO) says that the unemployment rate hit 6.1% which is the highest in 45 years.

General election 2019

BJP and Indian National Congress have targeted similar issues in their manifestos. Despite that, the two political parties have adopted different ideologies to achieve the goals. While BJP has prioritised national security, Congress party has concentrated more on restoring financial stability.

Features of NYAY - Nyuntam Aay Yojana (Minimum Wages Program)

Rahul Gandhi, the President of Indian National Congress has announced a new poll promise, a scheme codenamed as 'Nyuntam Aay Yojana' (NYAY).

Under this scheme, 20% of the poorest families (which are earning less than Rs. 12,000 monthly) will get a remuneration of Rs. 6000 per month which will be directly transferred to their bank accounts, if the Congress government comes in power.

While Congress promised to create 22 lakh jobs in its manifesto, the NYAY scheme was tied up as a tool to eradicate inequality in income and unemployment.

It is said to boost the purchasing power of people, leading to higher consumption in turn. Higher consumption is loosely linked to higher job creation in economic terms.

One more reason for introducing this scheme is to restore balance in the economy. Many reports clearly show a high level of income disparity between the rich & the poor.

This scheme is said to require approximately 3.6 lakh crore rupees & will benefit 5 crores, poor families, according to Congress Manifesto.

Pros of Nyay Scheme:

Minimum income assistance can help poor people in providing nutrition to their children & also support them financially like send their children to schools. As a result, they will become contributing members of society in the coming future.

Subsuming less efficient schemes can create the necessary funds for the implementation of this scheme. Increasing taxes can also help fund building.

Low-paid jobs will not attract people as they now have the assistance of a minimum income scheme. And thus employers will pay more, leading to higher minimum wages, thereby improving per capita income in the long term.

This scheme follows direct cash transfer, eliminating pilfering if fake beneficiaries do not exist.

The party has promised that this amount will be transferred to the accounts of women of the family, which will empower women.

Cons of Nyay Scheme:

It is quite widely observed that when there are not enough jobs available for the lower strata of society, minimum income schemes cannot eradicate poverty. Instead, it will make dependent on similar welfare programs forever.

In 2018-19, India stands at a fiscal deficit of 3.4%. For proper implementation NYAY scheme, it requires Rs. 3.6 lakh crores which, given the fiscal deficit, may not be possible. Also, amount spending for developmental purpose is much more effective than directly distributing cash.

People who are employed in the unorganised sector do not have a fixed source of income throughout the year. In addition, agriculture provides seasonal employment. Considering all these factors, it will be very difficult to target the bottom 20% of poor families, because sometimes they will belong to the category and sometimes not.

Presently, India is the world’s fastest-growing economy; still, poverty rates are not decreasing due to non-inclusive growth. Without concentrating on steps towards inclusive growth, mere minimum income schemes may not work.

NYAY may lead to a rising in Inflation.

Due to NYAY, there is no incentive to work, and it may make people lazy, and they may stop looking for work, which would be severe for a developing country like India.


If it is targeted well and correctly scrutinized, NYAY can bring at least a certain chunk of the population above the poverty line. However, it can only be a success if there is the creation of employment opportunities simultaneously.

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