New Delhi: Finance minister Arun Jaitley on Sunday said the idea of Universal Basic Income proposed in the Economic Survey 2016-17 may not be politically feasible in today’s India.
Inaugurating a one-week teachers’ workshop on Indian economy at the Indian Institute of Technology, Delhi, Jaitley said this year, the survey sparked an important debate on subsidies. “Should we put money into the bank accounts (of the poor) as we are intending to do at the moment, or should we substitute the entire set of subsidies and instead to a defined section below a certain poverty line, we give them a universal basic income. And that Universal Basic Income expedites their pulling out of the present state of poverty that they live in," Jaitley explained.
ALSO READ: Will a universal basic income work in India?
Jaitley said while he is fully supportive of the idea of Universal Basic Income, realizing the limitations of Indian politics, it may not be politically feasible. “I have always expressed to him (chief economic adviser in the finance ministry Arvind 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, let’s have the Universal Basic Income, something that the budget will not be able to afford," he said.
Universal Basic Income is a form of social security guaranteed to citizens and transferred directly to their bank accounts and is being debated globally. The Economic Survey 2016-17 had proposed the concept of Universal Basic Income as an alternative to various social welfare schemes in an effort to reduce poverty.
Switzerland last year rejected a proposal in a referendum to guarantee every adult citizen and long-term resident 2,500 Swiss francs (around Rs1.7 lakh) per month, while Finland is set to experiment with the idea on a pilot basis.
ALSO READ: The case against universal basic income
While the reasons for providing Universal Basic Income in western countries, where the idea was originally developed, are stagnant wages and an effective demand collapse, in India, the issue at hand is providing financial security to the poor.
The survey tabled in Parliament on 31 January, a day before the budget by Union finance minister Arun Jaitley, juxtaposed the benefits and costs of the Universal Basic Income scheme. The survey admitted that Universal Basic Income, based on the principles of universality and unconditionality is a conceptually appealing idea but with a number of implementation challenges.
There was speculation about the finance minister announcing a Universal Basic Income-like scheme in some form in his budget, after the Jammu and Kashmir government became the first state government to commit to Universal Basic Income for all citizens living below the poverty line.
ALSO READ: Finland and universal basic income
The ministry is also debating another idea floated by the Economic Survey—that of establishing a bad bank—Jaitley said.
It was proposed in the survey that all non-performing assets of banks could be vested in the bad bank, so that the rest of the banking system could carry on with its own activities.
PTI contributed to this story.