A case for basic income for the poor

Ashim Bhuyan

(The writer can be reached at bhuyanashim@yahoo.com)

In the Economic Survey of 2016-17, authored primarily by Dr Arvind Subramanian, the then Chief Economic Adviser (CEA) to the Government of India, a case for universal basic income scheme was proposed for the Country, when it caught the attention of intelligentsia. Very few talked about it then, or rather, moved the concept ahead. In fact, it was largely ignored by the Central Government, for the reasons best known to it. Many rubbished this concept. There were those academic discussions on this concept, but nothing beyond that.

Bertrand Russell was one of the key supporter of the first social movement for Basic income for citizens in and around 1920, in the United Kingdom. Basic income as a social scheme exists in some countries around the globe, in one form or the other. It is known by different names : Universal Basic Income (UBI), Citizen’s Income (CI), Citizen’s Basic Income (CBI) (in the United Kingdom), Basic Income Guarantee (BIG) (in the United States and Canada), or Universal Demo-grant. The end result is that a periodic cash payment gets delivered to all legitimate citizens of a Country on an individual basis, without means test or work requirement.

Normally, Basic income scheme has certain characteristics:

- Individual: Basic Incomes are paid on an individual basis.

- Automatic: Basic Income are paid periodically (monthly, weekly, etc), and automatically.

- Right to income: every legal citizen receives a Basic Income, as a right.

- Non-withdrawable: Basic Incomes would not be withdrawn if there is increase or decrease in one’s income.

- Unconditional: A Basic Income may vary with age, but there cannot be any other condition.

The success of “Rythu Bandhu” scheme that brought great electoral dividends to K Chandrasekhar Reddy, the Chief Minister of Telangana, and the leader of Telangana Rasthriya Samithy (TRS), has made many, specially the political parties, to take elaborate note, especially as a vote catching theme. The Rythu Bandhu welfare scheme is in place in Telengana for last few years, and people there have actually tasted benefits of the scheme. The KALIA scheme in Odisha is a welfare measure, though this scheme is for farmers and their families. The Congress party has gone into election mode, and its President, Rahul Gandhi, recently announced that the poor would receive a minimum income if the party is voted to power at the Centre.

Dr Arvind, Subramanian, former CEA of to the Central Government, in a seminal work co-authored with Josh Felman, Boban Paul and M R Sharan, and published recently, has strongly proposed an alternative to build a new rural India where a basic income, regardless of agricultural vagaries, would be guaranteed. The report states that “The agrarian crisis created an opportunity to initiate discussions on a real social safety net for rural India”. The authors have named the scheme as QUBRI - Quasi-Universal Basic Rural income. It is emphatically acknowledged, in this work, that there is rural distress, and earnings of farmers and in rural areas are subject to some uncertainties. If there is less agricultural production, rural India suffers enormously, and but when the agricultural production is good, farmers do not get adequate price for the produce. Rural economic crisis also presents an opportunity to address the issue. QUBRI emphasises on three features and combines these : direct cash transfer to rural households as rural economy needs focus, everyone except only the well-off would be covered, and there would be broad coverage of rural households (say 75%) to consider such income as “basic”. The report also makes it clear that this scheme would not be very costly, and a monthly income of Rs. 1500 (that is Rs. 18,000 per year) per household, would cost the exchequer 1.3% of the GDP (about Rs. 2,64,000 Crore) at 2019-20 prices.

There are host of views on Basic income, some in favour, others, obviously, against such schemes, though not much discussion has taken place in the public domain in this respect, till date. There would be financial, administrative, and other costs associated in implementation of such schemes, and ways and means of generating finances for the same. Moreover, the Indian polity has a federal structure, with the States having a very large role in implementing such schemes. Efficacy of states in implementation of centrally sponsored schemes, partly or fully, is an issue. “Ayushman Bharat” - a health insurance scheme - launched by the Government at the Centre is a case in point, with some States even opting out of the scheme. Preparation of (or rather exclusion of) beneficiaries’ list would be a challenge. There may be some social issues like people getting less enthused to work hard. Further, if this becomes a vote garnering mechanism, like loan waiver schemes, it may become a nightmare to the economy, and the Country, with political parties likely to outdo the other in promising the moon. Many other welfare measures, both at the Central and State level, needs to be rationalized. Financial health of at-least some states in co-sponsoring such schemes may be a thorny issue.

On the positive side, a basic income for the poor would ensure certain level of income support especially to the rural households, even in extreme adverse conditions. This would have impact on economic activities. Ownership and allegiance to the State, which is a challenge in certain parts of the Country, may be positively impacted. With direct benefit transfer to bank accounts, such schemes may have little opposition, and less scope for leakages. Saving many a human live may also be its consequence.

Perhaps, the time has come for the Nation to think about alleviating the economic condition of the poor, especially those in the rural heartlands, by way of a guaranteed basic income to the households. However, this should be as a national agenda, cutting across party lines, with the sole objective of raising the standards of living. All States and the Centre must be on the same page. Any objective only to prop up the votes may have disastrous consequences.