7 min read.Updated: 18 Oct 2016, 05:53 AM ISTNimai Mehta
A UBI handout by itself will not solve the problem of low income-earning opportunities and inadequate quality of human capital services consumed by the poor
Economist Pranab Bardhan and others have recently advocated that the government of India provide every citizen a universal basic income (UBI). UBI would avoid the inefficiency and wastage associated with government subsidies, and help lift the poor out of poverty. Based on poverty estimates for 2014-15, they propose an annual payment of between Rs3,500 and Rs10,000 per person. This amounts, in total, to 3.5-10% of gross domestic product, at 2014-15 prices. Bardhan argues that UBI payments could comfortably be absorbed in the budget by ending the “non-merit" subsidies and tax exemptions that mostly benefit the rich.