Universal Basic Income only after withdrawal of existing schemes: Arvind Subramanian

Ahmedabad: Chief economic advisor Arvind Subramanian said on Friday that the Universal Basic Income (UBI) advocated by the Economic Survey can be put in place only after the withdrawal of existing welfare schemes.

“The cost of this programme (UBI) is so huge that it cannot be an add-on to the existing programmes as the government cannot afford it and the government’s finances will go bust,” Subramanian told students of the Indian Institute of Management Ahmedabad (IIMA). “In India, UBI is about upliftment of the poor... The government spends a lot of money on social welfare schemes, but they do not reach the targeted audience,” he said.

He cited the example of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in which, he said “the most deserving in the society are often left out”. Also, relatively more progressive states such as Tamil Nadu and Andhra Pradesh had implemented the scheme better than states such as Bihar and Uttar Pradesh.

One of the pre-requisites for UBI to be successful is a functional Jan Dhan, Aadhaar and Mobile system that ensures cash transfers directly to the accounts of beneficiaries, Subramanian said, adding one of the challenges in implementing UBI is that 350 million people in India do not have a smartphone or even a phone— another area of concern.

He countered the notion that putting money directly in the bank accounts of the poor will mean that the beneficiaries are going to squander it, calling it an elitist argument.

On UBI, Subramanian, an IIMA alumnus, sounded a note of caution: “It is very easy to introduce new programmes... but it is very difficult to withdraw the existing ones.”

Subramanian said it was puzzling that while developing countries such as India were converging and growing faster than developed countries, wide disparities exist among the states of India.

“In the last 15 years, poorer states are growing slower than progressive ones. The disparities within India are a deep, deep puzzle for me,” he said, adding that this was despite high inter-state migration and high levels of internal trade that contributes 55-56% of India’s GDP—more than in the European Union and Canada, where it is 20% of GDP.