Last Updated : Jan 30, 2018 04:16 PM IST | Source: Moneycontrol.com

Can India implement Universal Basic Income?

In developing countries, the unconditional direct cash transfer scheme is looked at as a poverty alleviation programme. The cash is directly deposited in the beneficiaries' bank account, no questions asked.

Nidhi Chugh

The Economic Survey 2016-2017 brought to light that Universal Basic Income (UBI) is feasible for India and that it can replace all existing social welfare schemes.

The latest Economic Survey also points the possibility of implementing UBI in at least one or two states in the near future.

In developing countries, the unconditional direct cash transfer scheme is looked at as a poverty alleviation programme. The cash is directly deposited in the beneficiaries' bank account, no questions asked.

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The beneficiaries will, at the max, only be required to have a bank account and show residence proof to receive the benefits. For the beneficiaries of the Indian pilot, they were required to have bank accounts.

Since it is a measure to eradicate poverty, the UBI in India will not be universal, i.e., be provided to all. If implemented, the Lower Income Groups (LIGs) are likely to be the beneficiaries.

Another reason why UBI is considered for developing countries is the belief that technology will take over jobs. Here's a quick infographic by  Futurism to show you the jobs at risk because of technology advancement.

developing vs developed - ubi in india

(Source: Futurism)

The Pilots in India

The UBI pilots in India, funded by the UNICEF, operated in the villages of Madhya Pradesh from 2011-2012. Two pilots were simultaneously conducted, one was running in nine villages and the other was in two tribal villages, testing if UBI will pan out in these villages.

The first pilot, Madhya Pradesh Unconditional Cash Transfer (MPUCT), funded 6,000 individuals in eight villages for 12 to 17 months. Against the eight villages receiving the UCTs, 12 similar villages were not receiving the cash transfer. When the pilot first started in the eight villages, for a year, each adult received Rs 200 and each child received Rs 100 every month.  After this period, the cash amount increased to Rs 300 for every adult and Rs 150 for every child.

The second pilot was conducted in two tribal villages, where one village received UCTs and the other did not. For the tribal village that was receiving the benefit, the amounts were Rs 300 for each adult and Rs 150 for each child in a month.

The pilot results were positive. The results showed that the beneficiaries began to save more and use the money wisely. Beneficiaries were using the funds to improve their standard of living - increasing their household expenditure, funding their children's education, among others.

Is what the Government proposing enough to eradicate poverty?

Although the results were positive, the government will implement this scheme only on the condition that the existing social welfare schemes are foregone.

Jawaharlal Nehru University Economics Professor Jayati Ghosh said, "There are fundamental issues of implementing basic income in India."

Ghosh supported her statement by giving three reasons.

The first reason she stated was that social welfare schemes should run along with UBI, and not as an alternative. "The government is already under-providing our basic social welfares," she said.

The second reason, and the most fundamental, is that India's poverty line is flawed. She argued that the BPL (Below Poverty Line) structure is weak and incorrect, and that it excludes many who are in need of it. And therefore, the UBI in India should be universal and not only for LIGs.

Thirdly, she explained how the government has failed to increase the pension amount for the beneficiaries of the Pension Parishad scheme. She, being a part of the Pension Parishad panel, said that the panel has been asking the government to increase the pension amount from Rs 200 to Rs 500. Giving this example, she said, "The probability of providing basic income is minimal."

Speaking more about the third reason when asked if the IMF-quoted Rs 2,600 calculated for 2011-2012 transferred to every person is sufficient, she negated the quotation by saying, "People need to increase their expenditure on health, nutrition and education," pointing that this will give a boost to every individual's economic and social life.

When asked this to Maitreesh Ghatak, an Economics Professor at London School of Economics, he too pointed that the amount is not sufficient. "Clearly not. It is an astonishingly low number and so it is best to check if the IMF has indeed said this. Even by our own poverty line estimates, to give a single person the amount that defines the poverty line equals Rs 1,200 per month," he said.

Due to these implementation issues, even though the pilot showed positive results, experts pointed out that it is necessary for India to first correct the basic issues like correcting the poverty line to successfully implement UBI.
First Published on Jan 30, 2018 03:35 pm
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