Universal Basic Income ideal to tackle poverty, says Economic Survey 20173 min read . Updated: 01 Feb 2017, 10:54 AM IST
Universal Basic Income is a form of social security scheme that is guaranteed to citizens and transferred directly to their bank accounts, says Economic Survey 2017
New Delhi: The Economic Survey 2017 made out a strong case for Universal Basic Income (UBI), presenting it as a radical solution to alleviating abject poverty.
The report said Universal Basic Income is a powerful idea that should at the least be debated seriously. It is a form of social security guaranteed to citizens and transferred directly to their bank accounts and is being debated globally.
“The survey is not advocating universal basic income for immediate implementation but the time is ripe for deliberation. Given the costs attached, universal basic income would be viable only if it replaces existing welfare schemes," Arvind Subramanian, chief economic adviser in the finance ministry, said at a press conference on Tuesday.
The report also argues that despite making remarkable progress in bringing down poverty from about 70% at independence to about 22% in 2011-12, more is needed to be done to eradicate poverty. Part of the problem, it argued, were leakages and the exclusion of some poor from welfare programmes.
Significantly, the Universal Basic Income is politically in line with Prime Minister Narendra Modi’s push for poverty alleviation as well as the ruling Bharatiya Janata Party’s (BJP) ideologically stated position of antyodaya or reaching out to the last person in the queue.
The government’s argument too is based on the guiding principle that Universal Basic Income would help in “wiping every tear from every eye."
Political analysts welcomed the concept. Sandeep Shastri, a political analyst, said, “If such a scheme succeeds it will be a game changer for the current government...but most such schemes fail in the implementation stage, so devising a strategy is crucial."
The survey released by the Union government on the first day of the budget session said Universal Basic Income would not exclude the need to develop state capacity and the government would still have to provide a whole range of public goods.
“Universal Basic Income is not a substitute for state capacity, it is a way of ensuring that state welfare transfers are more efficient so that the state can concentrate on other public goods," the report said.
The economic survey argued that a prerequisite for the success of Universal Basic Income is JAM (Jan Dhan accounts, Aadhaar and Mobile); the government would also have to address the key question of centre-state shares in funding of Universal Basic Income. The survey indicated that the Union government would have to negotiate with state governments to share funding of Universal Basic Income.
“Crucial to the success of the Universal Basic Income is effective financial inclusion. Nearly a third of adults in India still do not have a bank account and are likely to be left behind. These are also likely to belong to the poorest social groups—women, SCs, STs, the ageing and the infirm—who benefit most from state-funded subsidies. As per official records, there are 26.5 crore Jan Dhan accounts, 21% of the population across the country. Of the 26.5 crore Jan Dhan accounts, 57% are Aadhaar linked," said the Economic Survey.
Emphasizing the misallocation of funds to various government schemes, the survey says that the budget for 2016-17 indicates that there are about 950 central sector and centrally-sponsored sub-schemes in India accounting for about 5% of GDP by budget allocation.
Among the top schemes that account for about 50% of total budgetary allocation are the public distribution system (PDS) followed by urea subsidy and the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).