Universal Basic Income and India: Congress, Sikkim, Economic Survey,Rythu Bandhu

Rahul Gandhi Promises Minimum Income Guarantee To Poor If Congress Returns To Power in 2019. Sikkim is set to become the first state in India to roll out Universal Basic Income(UBI).  The 2017 Economic Survey had flagged the UBI scheme as “a conceptually appealing idea” and a possible alternative to social welfare programmes targeted at bringing down poverty. A Universal basic income is a regular, periodic cash payment delivered unconditionally to all citizens on an individual basis, without the requirement of work or willingness to work. So What is the idea of Universal Basic Income? How is India approaching Universal Basic Income? What has Congress declared, what has Sikkim declared for Universal Basic Income? What was suggested in Economic Survey 2016-17.

What is Universal Basic Income?

The threat of automation and the widening divide between the rich and the poor have pushed the world to consider different income redistribution concepts in the past few years. And one of the concepts that has received the most attention is the idea of a universal basic income, or UBI

Universal Basic income has the following five characteristics:

  1. Periodic: it is paid at regular intervals (for example every month), not as a one-off grant.
  2. Cash payment: it is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not, therefore, paid either in kind (such as food or services) or in vouchers dedicated to a specific use.
  3. Individual: it is paid on an individual basis—and not, for instance, to households.
  4. Universal: it is paid to all
  5. Unconditional: it is paid without a requirement to work or to demonstrate willingness-to-work..

Several experiments and pilot project have been implemented across the world but not fully adopted by any country, shown in the image below. Ref:IndiaToday

In India, In May 2018, Telangana became the first state to implement an income support scheme, the Rythu Bandhu. Rythu Bandhu provides Rs 8,000 per acre to farmers over two crop seasons.  Odisha’s KALIA also assures a fixed amount to farmers

The UBI is an idea first developed by Thomas Paine in 1796, when he advocated that every person over the age of 21 be compensated for the loss of her natural inheritance due to the introduction of the system of landed property.

Universal Basic Income, UBI, in countries of the world
Universal Basic Income, UBI, in countries of the world

Founded in 1986, the Basic Income European Network (BIEN) aims to serve as a link between all individuals and groups interested in basic income and to foster informed discussion on this topic throughout the world. Details of Basic Income European Network is basicincome.org

Congress, Rahul Gandhi and Universal Basic Income

We have now taken a step that no govt has taken before. We have decided to give every poor person a Minimum Income Guarantee when we form the govt. This is a historic step taken to eradicate hunger and poverty: CP @RahulGandhi #CongressForMinimumIncomeGuarantee pic.twitter.com/pR0v61cKWZ 

Garibi Hatao (“Remove Poverty”) was the theme and slogan of Indira Gandhi’s campaign for the 1971 Lok Sabha elections which was won by the Congress under her leadership giving her a second term as the prime minister.

Rahul Gandhi has not declared what the “minimum income” has would be or who will it cover. Rahul Gandhi has not said whether his proposed minimum income guarantee will cover 22 per cent of the population (as fixed by Tendulkar) or 29.5 per cent (fixed by Rangarajan). The UBI involves a form of income transfer to every person within a territory. Congress’s proposal, in contrast, would be for ‘every poor person’ and not every person.

Rahul Gandhi also said the Congress had promised to waive farm loans in Chhattisgarh within 10 days of coming to power but implemented the decision within a day after forming the government. The Congress posted a massive victory in 2018  Assembly polls in Chhattisgarh, winning 68 of the total 90 seats and ending the BJP’s 15-year rule.

Sikkim and Universal Basic Income

Sikkim’s ruling party, the Sikkim Democratic Front (SDF), has decided to include UBI in its manifesto ahead of the Assembly elections in 2019 and aims to implement the scheme by 2022. It has already started the process to introduce the unconditional direct cash transfers.

Sikkim has a literacy rate of 98 per cent and its monthly per capita expenditure in rural areas is Rs 1,444.06 and it is Rs Rs 2,538.11 for urban areas. The BPL percentage has come down from 41.43% in 1994 to 8.19% in 2011-12.

The idea is to subsume other subsidies and allowances in order to provide a particular amount every month to people. Prem Das Rai, SDF MP in the Lok Sabha, said it would “work well for the youngsters” because “it would give freedom to choose their work, it will be more futuristic and it will serve as a future production tool. Young people can look into the future without worrying too much about income,”

The SDF government has already considered the “affordability” of the scheme. The successful implementation of the hydropower projects by the state has made it a surplus power generating state. The state produces 2200 MW and it will go up to 3000 MW in the next few years. The state’s requirement is only 200-300 MW and the rest goes to power trading firms.

2019-20 Budget and Pradhan Mantri Kisan Samman Nidhi

FINANCE Minister Piyush Goyal on 1 Feb 2019, unveiled the Pradhan Mantri Kisan Samman Nidhi promising “assured supplemental income” to disadvantaged farmers. This Scheme aims to cover more than 12 Crore Poor Farmers of Country. Every Beneficiary gets Rs. 6000 Per year as Financial Assistance. The scheme will cost ₹75,000 crore (US$10 billion) per annum and will come in effect from December 2018. INR 6,000 per year will be paid to each eligible farmer in three instalments and will be deposited directly to their bank accounts.

Official Website of PM Kisan Samman Yojana pmkisan.nic.in

Pilot Projects of UBI in India

The first ever pilot in India to test the feasibility of a basic income programme was carried out in a West Delhi slum — prompted by complaints over a “clogged” PDS scheme.  ‘Delhi Cash Transfer’ pilot study, organised by the NGO Self Employed Women’s Association (SEWA). The participants had Rs 1,000 transferred to their accounts per month for 2011, in exchange for PDS,  to spend anyhow they liked,

In 2011, nine villages in Madhya Pradesh( Mali Badodia in Indore district) were picked for the Madhya Pradesh Unconditional Cash Transfers Project, the 18-month trial the only large-scale basic income programme conducted in India. 6,000 people (all members of a household) got money over and above the schemes. While some say it changed their lives forever, others say they worried a little less over basic needs, even if briefly. This was a pilot project by SEWA, with funding from UNICEF.  Under the pilot, every adult member was given Rs 200 a month and children Rs 100 each for a year, between June 2011 and May 2012. Between July 2012 and November 2012, the amount was hiked to Rs 300 for an adult and Rs 150 for every child. Back then in Mali Badodia village, a day’s wage was a little more than Rs 100.

The results, in both cases, the organisers say, were positive. Most households spent the money well. The pilot study also found that cash transfers did not adversely affect food security, and the basic income allowed households to spend more on healthcare.

2017 Economic Survey and Universal Basic Pay

The 2017 Economic Survey had flagged the UBI scheme as “a conceptually appealing idea” and a possible alternative to social welfare programmes targeted at bringing down poverty. The Economic Survey of India’s model of UBI suggested providing Rs 7,620 per annum to 75 per cent of India’s population. The income was based on Tendulkar’s poverty line of 2011-12 inflation-indexed to 2016-17.

The survey had estimated that such a model of UBI will cost 4.9 per cent of India’s GDP in comparison to 5.2 per cent of GDP spent on all 950 central sector and centrally sub-sponsored schemes. Under the scheme, income transfer was envisaged through direct benefit transfer to the concerned individual using Aadhaar. It was also recommended to start the scheme with women, elderly people, widows, and persons with disability.

Each year, the Ministry of Finance of the Government of India releases a document called the Economic Survey, which reviews and analyzes developments in the nation’s economy. The Economic Survey is made publicly available and is presented to the Indian Parliament during its budget session.

Economic Survey

The 2016-17 Economic Survey, with its 40-page chapter “Universal Basic Income: A Conversation With and Within the Mahatma,” was officially released on January 31, 2017.  Its discussion on UBI is framed around the question of whether Mahatma Gandhi would have endorsed UBI, a question that Subramanian anticipated in comments to an inter-faith prayer meeting last fall. The tone of the chapter is highly sympathetic to UBI, and the Ministry of Finance calls UBI a “powerful idea whose time even if not ripe for implementation is ripe for serious discussion.”

BIEN co-founder Guy Standing, who conducted basic income pilot studies in India earlier in the decade, was among those who provided input to the Indian government for the survey. Standing states,

Universal Basic Income, Economic Survey Mahatma Gandhi
Universal Basic Income, Economic Survey Mahatma Gandhi

Suresh Tendulkar and C Rangarajan headed committees that studied poverty in India. Both arrived at different qualification of poverty.  Tendulkar’s version fixed 22 per cent of the population as poor, C Rangarajan pegged the figure of poor families at 29.5 per cent or 363 million.

The per capita rural spending level was also revised from Rs 27.2 in 2012 to Rs 32 in 2014-15 while it was changed to Rs 47 from Rs 33.3 for urban areas.

Rythu Bandhu

In August 2018, the Telangana government launched ‘Rythu Bandhu’ investment support scheme for farmers. The Rythu Bandhu (Agriculture Investment Support Scheme) takes care of initial investment needs of every farmer. Aimed at relieving farmers of debt burden and cease them from falling into the debt trap again. A budget of Rs.12,000 Crores has been provided for the financial year 2018-19 by Government of Telangana.

The scheme provides a grant of Rs 4,000 per acre per farmer each season(total Rs 8000 per year) for the purchase of inputs like seeds, fertilizers, pesticides, labour and other investments in the field operations of farmer’s choice for the crop season. There is no cap on the number of acres, and most of the farmers are small and marginal. The total farming land is 1.43 crore acres and the number of farmers in the state stood at 58.33 lakh. Around 55% of the population in Telangana make a living from agriculture. The money is given to the farmers through a bank bearer cheque.

The scheme has been criticised by economists, including former chief economic adviser Arvind Subramaniam(who suggested UBI), for being regressive, that is, making proportionally larger transfers to farmers who own more land.

1 Comment

  1. In 2019 no one should go to bed hungry. From that point of view giving monetary assistance to individuals is good humanitarian effort. But, in a country where so few people pay tax, where is the money going to come from? Money will be diverted from other important needs of the nation. Financial assistance is good for winning election, is it a good long term policy? I think financial assistance should be given to people who do not find employment and constitute a small fraction of total population. In India, this number is very large. I appreciate the kindness in this action, but I do not know how practical will be the approach.

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