April , 2021
Is UBI acceptable to India?
12:40 pm

Kishore Kumar Biswas


The provision of universal basic income to citizens of a country has been a matter of discussion for long around the world. It is meant for uplifting people from poverty and maintaining economic stability of a country.

The UBI is considered as an automatic economic stabiliser since it would ensure more spending in economic recession. It should be universal as it is intended to paid to all by the state unconditionally, that is, without consideration of receivers’ income, spending and behavioural conditions. It means every people would get UBI and that can be spent wherever the receiver likes, it is also independent of his/her types of jobs she/he is engaged in.

The basic income connotes am amount that would enable someone to survive in extremis, in the society she/he lives in. But the income could be more also. 

Roots of the idea of UBI

Guy Standing, Professor, London School of Economics, in his book Universal Basic Income: And How Can We Make It Happen (Pelican, 2017) pointed out that the roots of UBI have been very old to Pericles and Ephialtes, who in 461 BC triumphed as leaders of ‘plebeians’ in Ancient Athens. It was Ephialtes who initiated democratic reforms that involved paying citizens for jury services. But shortly afterwards he was assassinated. Many centuries later, Sir Tomas More, in his fictional vision of the island, Utopia (literary; ‘no place’) published in Latin in 1516, is commonly identified as the first to picture a society with a basic income (Sanding, pp 9-10). In Utopia one of his characters says: 

No penalty on earth will stop from stealing if it is the only way of getting food....instead of inflicting these horrible punishments, it would be far more to the point to provide everyone with some means of livelihood, so that nobody is under the frightful necessity of becoming first a thief and then a corpse (p 11).  

Sanding mentioned many reputed economists, 12 of them are Nobel Laureates and many very big names in the corporate world as well as many noted politicians including former US president who supported provision of guaranteed minimum income supports in any form for upliftment of the economic condition of the common people.

Is it desirable in India? 

It is desirable to take policy to reduce the vulnerability of the poor. A guaranteed income policy would be easy for the government to implement. It is known that there have been a huge targeted welfare policies in India. But the implementation is not at all efficient because there is leakage of resources in each case. At the same time many really deserving men do not get the benefits whereas undesirable persons take a big share. Pranab Bardhan, Professor emeritus, University of California, Barkley, USA thinks (Ideas for India, 20September, 2016) that in India the UBI can not be implemented replacing the already existing welfare policies like public education, public health, pre-school children nutritional programme or employment guarantee programme.

It should be implemented in addition to some important already existing welfare programmes. At the same time not all the welfare programme in kind can not be replaced by cash transfer. This is because in many placed of India market is not developed. So availability of desirable items is not guaranteed. At the same time it is difficult to access to goods for livelihood in time.

A few years back in Bihar as well as in other few states where school students were asked to purchase cycles. After submission of the purchase bill each student would be reimbursed a fixed amount of `3000. It was reported that a lot of students living in remote villages found difficulties in buying bicycles as it was difficult for many to go to the distant market place to buy bicycles. In many cases availability of many items of daily necessity become a problem for the rural people.

Affordability of UBI in India

Many reputed economists have estimated about the the requirements of the financial resources to implement it in India. Their estimation procedures and assumptions are different. But most of them conclude that it is not impossible to implement if political will is there. Most of them estimated that India needs 10%-12% of its GDP would be enough to implement UBI considering payment of 3/4th of the BPL income level.

Pardhan pointed out that an estimate of the National Institute of the Public Finance and Policy in Delhi that every year the Indian government gave out about 14% of GDP in subsidies for central and state governments together. Roughly 2/3rd of the subsidies are described as ‘non-merits’, that is mostly going to the better off section of the population. This amounts to about 9% of the GDP.

This deliberately excludes subsidies for health, education nutrition, environment, rural and urban development programmes, etc. So it is clear that significant leakages from these programmes to non-target-better-off groups are not included in the 9% mentioned above. It is known that all food subsidies are included in the merit subsidies. Whereas according to some observers a considerable portion of agricultural subsidies go to the rich farmers. But this has helped to meet India’s target of food self sufficiency. 

Bardhan also points out that about 6% of the GDP (states’ share has not been calculated) is sacrificed as “revenues foregone” in the form of tax holidays and exemptions largely for firms and companies. He suggests that if half of this 6% is added to the 9% mentioned above, it becomes more than sufficient for meeting the target of UBI in India with out recourse to additional resource generation..  

Does India lack political will?

The Congress Party expressed in its parliamentary election manifesto in 2019 to implement UBI if it was voted to power. In the coming assembly election Congress leader Rahul Gandhi promises if the Congress is voted to power in Kerala, UBI would be implemented. Other than Congress no political party in India had never emphasised implementing UBI as their political programme.

At present in India only a small section of workers in the organised sector enjoys social security. Beside that vast majority of workers in the unorganised sector has no or little social security. But now many people are being covered under health, food, education, securities. Many aged persons get old age pensions in the form of cash. But in spite of all a vast majority of workers and people are vulnerable still today. They really need protection. And in this respect demand for implementation of UBI must have political appeal. Some social scientists think that different workers’ organisation can start mobilise opinion about this.

 Today casualisation of workers has been rising even in the organised sector. So creating opinion among the unorganised workers about implementing UBI can be an attractive political or social task.

A section of economists like Amit Bhadury does not consider implementation of UBI as a good policy. Bhaduri propagates a different policy of development which is actually a parallel policy. It is a paradigm shift of development policy in the era of neo liberalism developed in his book Development with Dignity in 2005, published by National Book Trust. That development policy should be highly decentralised and local people would be involved in the development process.

Income generation and local assets generation in the decentralised manner has been the main motive force in that development policy. This is actually an antidote to the aggression of neo liberal economic growth process.   



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