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NEW DELHI : Congress party president Rahul Gandhi on Monday formally put the idea of the universal basic income on the political agenda after he promised to implement it if the party was voted to power in the forthcoming general election.

“We have taken a decision to ensure that every poor person in India after 2019 will be provided with a minimum income guarantee. This means that the bank account of every poor person will have a minimum income to be given by the government. No one will go hungry and no one will be poor in the country," Gandhi said while addressing a farmers’ rally in Raipur, Chhattisgarh.

Coming as it does in the backdrop of an earlier promise to waive all farm loans, Gandhi has upped the populist ante. It will be interesting to see if other political parties, particularly the incumbent Bharatiya Janata Party (BJP), take the cue and start making similar promises.

First proposed by former chief economic adviser in the finance ministry Arvind Subramanian in his Economic Survey for 2016-17, universal basic income (UBI) is a form of social security guaranteed to citizens and transferred directly to their bank accounts to ensure a minimum living standard for all.

Subramanian on Monday floated a fresh version of the proposal—which coincidentally found echoes in Gandhi’s proposal—in a column published in Business Standard. Subramanian made out a case for direct cash transfers to 60-80% of the rural poor that would work as an effective cushion against rural distress.

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(Photoby PTI, Graphic By Sarvesh Kumar Sharma/Mint)

The move is politically significant as it comes just months ahead of the 2019 general elections where the Congress party is attempting to corner the Prime Minister Narendra Modi-led government, particularly over the issues of rural distress and access to services for economically weaker sections. It may also put pressure on the government to announce a similar programme. It is reportedly contemplating a direct fund transfer for farmers in the interim budget to be presented on 1 February.

Soon after the Congress won three crucial assembly elections in December, Gandhi, during the winter session of Parliament, made the promise of a nationwide farm loan waiver.

“This is more of a pre-emptive strike as the government was likely to announce something dramatic in the budget to be presented soon. The government’s announcement now, either on farm loan waiver or income support, will fade," a senior party functionary, aware of developments, said requesting anonymity.

According to the person quoted above, there was “nothing concrete on the table" in the party on the issue but Gandhi is known to have discussed the idea with a few top leaders and former Union ministers of the party to evaluate its feasibility.

Senior party leaders added that as of now there was no estimate on the number of beneficiaries or what it would cost the exchequer.

In October 2017, the International Monetary Fund (IMF) made a strong case for India adopting a fiscally neutral UBI by eliminating both food and fuel subsidies that could cost 3% of gross domestic product (GDP) or 5.6 trillion. While IMF proposed transferring 2,600 in 2011-12 prices to every person in India, it also highlighted the need for careful planning to overcome “political, social, and administrative challenges", especially because such subsidy reforms involve large price increases.

Union minister Arun Jaitley in June 2017 while supporting the idea of UBI said it may not be politically feasible as phasing out existing subsidies may be a difficult proposition.

“There was speculation that the BJP may announce something like this in the budget but now Rahul Gandhi has said it. In a way, the Congress is trying to outdo the BJP in providing cash support to the poor. It is a populist move. The Congress is not in power and so there is no clarity as to what kind of policy this will be embedded in," said Manisha Priyam, a New Delhi-based political analyst. 

In October 2017, the International Monetary Fund (IMF) made a strong case for India adopting a fiscally neutral UBI by eliminating both food and fuel subsidies that could cost 3% of gross domestic product (GDP) or 5.6 trillion. While IMF proposed transferring 2,600 in 2011-12 prices to every person in India, it also highlighted the need for careful planning to overcome “political, social, and administrative challenges", especially because such subsidy reforms involve large price increases.

Union minister Arun Jaitley in June 2017 while supporting the idea of UBI said it may not be politically feasible as phasing out existing subsidies may be a difficult proposition.

“There was speculation that the BJP may announce something like this in the budget but now Rahul Gandhi has said it. In a way, the Congress is trying to outdo the BJP in providing cash support to the poor. It is a populist move. The Congress is not in power and so there is no clarity as to what kind of policy this will be embedded in," said Manisha Priyam, a New Delhi-based political analyst. 

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