Minimum Income Support Price (MISP/NYAY)
Objective: It is to find out whether such scheme (MISP) will be beneficial to economy as a whole and most importantly, Will a government in developing countries will be able to fund this without increasingtaxes.
Method: We will try to create a model of development in which we will find out the effect of Investment, Consumption and Government expenditure on Relative GDP growth. GDP is driven by combined effect of Investment, Consumption, Govt Expenditure and Net exports. By linear regressing of data available of GDP between 1951 to 1992 (42 years) we will try to find out their respective weights on GDP growth.
Findings: As to make it successful it has to bear most of its expenditure from Investment and Governmental expenditure. But taking out from this quota has its severe effect. An economy cannot grow at a faster rate without developing its resources. To create resources in a developing economy it demands huge investment. According to Harrod-Domar Model a country needs to save more in order to invest more. As the money distributed under NYAY scheme will be given to poorer section of the society so the saving to consumption ratio will be much lesser in their case.
Improvements/Applications: A quantitative study of investment on GDP growth with clear results of its effect in future years will give a better idea to compare between investment and consumption.
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