- Prahlad Chowdhury
This year, 2017-18 the Economic Survey, tabled in Parliament on January 31, 2017 depicted a new concept – generally many of which are taken in budget being placed next day – was the Universal Basic Income (UBI). The Survey says that “Universal Basic Income an alternative to plethora of state subsidies for poverty.” Is it so and how would be such was the big question that cropped in minds then and thereafter. Let us discuss:
Q)What is a Basic Income?
A)Basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means test or work requirement.
Q)Why is it Universal?
A)The idea is that every citizen gets it and therefore it is universal. Chief Economic Adviser Arvind Subramanian said last year (2016) that the government is considering giving an unconditional cash transfer of about Rs 10,000-15,000 on an annual basis to each and every citizen in the country.
Q)Is it in cash, rather than in-kind?
A)Basic income is provided in cash, without any restriction as to the nature or timing of the consumption or investment it helps fund. In most cases, it supplements, rather than substitutes, existing in-kind transfers such as free education or basic health insurance.
Q)How would it work in India?
A)If implemented in India it could replace numerous poverty alleviation schemes such as Indira Awas Yojna, NREGA and PDS. On the other hand, the idea is that it supplements, rather than substitutes, existing in-kind transfers such as free education or basic health insurance.
Q)What is the rationale for it?
A)The changing nature of job creation – with increasing automation leading to fewer jobs– mean that in the next 20 years as much as 68% of existing jobs in the country will be under threat, hence the need for a guaranteed source of income.
Q)How much would a Universal Basic Income scheme cost in India?
A)As per Socio Economic and Caste Census(SECC),2011 there are 24.49 crore total household in India out of which rural households is 17.97 crore and there are 7.07 crore households that need no benefits(automatically excluded). The households that may need help would be 8.89 crore( 0.16 crore identified poor households and 8.73 households that face some deprivation). Rs.1.6 lakh crore will be the cost if every deprived rural household is given Rs.1500 a month.
Q)Has it been tried out in India?
A) Yes. In 2011, In eight villages in Madhya Pradesh, every man, woman, and child was provided with a monthly payment of, initially, Rs 200 for each adult and Rs 100 for each child paid to the mother or guardian; these were later raised to 300 and 150 respectively. The two pilot projects were funded by UNICEF.
Q)What were the results?
A) Guy Standing of the School of Oriental and African Studies, who was involved with the project, has written that the results were positive. Nutrition increased and the better health outcomes led to increased school attendance. The basic income led to small scale investments by the recipients and reduced debt levels.
Q)So is it the right way to go?
A)There is still no consensus on the issue. Critics caution that any scheme that provides an unconditional guaranteed income to a section of the population (as may happen in India) without having to work will create resentment. Also, getting rid of subsidies in kind (food, healthcare, and schooling) may result in decreased outcomes in these areas.
The case for UBI are: –Best way of addressing poverty by providing subsistence dole, it can help cut down on multiple welfare schemes, direct cash transfer will reduce pilferage and social inequality will be reduced.
The case against UBI are-Too costly for government to implement, discourage people from seeking employment and temptation to withdraw other benefits.
Conclusion: Indian politics currently lacks the maturity to give up subsidies for the greater goal of a universal basic income, finance minister Arun Jaitley said.
In an interview with DD News after presenting the Union budget for 2017-18, Jaitley said the country cannot afford to offer both subsidies and universal basic income. (by courtesy, Live Mint, economic survey)
