When I was Commissioner to the Government of Meghalaya in 1999-2000, I spent a lot of time and effort in trying to persuade the Chief Secretary, Commissioner for Rural Development and the Secretary of the Planning Commission to consider a pilot scheme for negative income tax in Meghalaya.

The scheme would have implemented the solution that I've been advocating for many years now – a scheme broadly based on Milton Friedman's negative income tax model.

This is the paper that I circulated (do read it – not very long but clearly explains the concept). The paper proposing the details of a pilot project in Mylliem Block in Meghalaya is provided here.

(A preliminary proposal that I circulated on India Policy Institute is linked here).

I even tried my best to get the Prime Minister's office on board. Of course, no one bothered. I was given all kinds of lame excuses. 

Getting SICK with a situation where poverty was not being addressed, and bad policies of all sorts were rampant (many in the name of poverty alleviation), I resigned the IAS and left India.

What I suspected has come true. The ABSOLUTE levels of poverty in India have increased, not fallen.

Prabhat Patnaik (whom I met at LBSNAA in June 1994 when he spoke to us on "investment and growth in liberalised economy") has identified this fact, and challenged those who claim that India is a "shining" success.

Although some people will debate his conclusions that "absolute impoverishment of the working people" has occurred in India, I'm not interested in such idle debate.

For me liberalisation WITHOUT A NEGATIVE INCOME TAX is recipe for disaster.

In BFN I vigorously argue for a social insurance scheme. The free society must ensure that everyone achieves a (frugal) minimum even as the society is liberated and made incentive compatible.

Instead of contesting Prabhat Patnaik's facts, it will be more sensible to even now (more than 12 years since I first propounded it!) to introduce a negative income tax program in India that ELIMINATES poverty entirely.

I am an enemy of poverty first, and then a friend of liberty. To me both MUST go hand in hand.