Has Arun Jaitley killed all hope of universal basic income becoming a reality?

The proposal of having Universal Basic Income (UBI) in India has been mooted for a long time. However, a recent statement by Finance minister Arun Jaitley has disappointed backers of the social security scheme.

What is UBI?

Universal Basic Income is a form of social security that puts a fixed amount of money into the pockets of every unemployed and poor people. Many countries see it as an effective way of reducing poverty. It is also known as guaranteed minimum income.

Basic income is currently implemented in France and some other European countries.

Mixed signals

Voices in the government have expressed contrasting views on the issue.

Finance minister Arun Jaitley on Sunday said that universal basic income as proposed in the Economic Survey 2016-17 will not be politically feasible in today's India.

“I have always expressed to him (chief economic adviser Arun Subramanian) the fear that once he moots ideas like the Universal Basic Income, we will be landing in a situation where people will stand up in Parliament and demand continuation of the present subsidies and over and above that Universal Basic Income, something that the budget will not be able to afford,” Jaitley said.

The annual Economic Survey this year included a chapter on UBI as a tool to reduce poverty. However,  the Survey's author Chief Economic Adviser Arvind Subramaniam maintained that the proposal was only to explore and initiate a debate on the topic.

Amitabh Kant, Chief Executive Officer of NITI Aayog, has said that any payout should be given only as a repayable loan for “productive purposes”.

Arvind Panagariya, Vice-Chairman of the NITI Aayog said that he was in favour of targeted transfers, where those living in poverty receive the benefits.

Some critics argue that UBI in India is made to look fiscally feasible with the assumption that the amount of money currently spent on various subsidies is justified.

With Jaitley's latest comments, there is uncertainty over whether there will be political will to implement the Universal Basic Income scheme.