The Indian Statistical Institute hosted its 12th Annual Conference on Economic Growth and Development (ACEGD) on December 19-21, 2016. ACEGD’s plenary sessions included a 90-minute panel on universal basic income and its relevance for India.
Universal basic income (UBI) has become a hotly debated issue in India. At the end of January, the Ministry of Finance will release its Economic Survey, which is expected to include a chapter addressing UBI. Leading economists have defended various forms of UBI for India (see, for example, a recent e-symposium in Ideas for India), and MPs such as Varun Gandhi and Jay Panda have voiced support.
Perhaps unsurprisingly, then, a panel on UBI was also held as part of the latest Annual Conference on Economic Growth and Development, held in December at the Indian Statistical Institute (ISI) in Delhi. This conference included a panel on UBI, featuring five economists: Debraj Ray (New York University), Kalle (Karl Ove) Moene (University of Oslo), Rajiv Sethi (Columbia University), Himanshu (Jawaharlal Nehru University), and Amarjeet Sinha (Government of Bihar).
Ray and Moene have jointly developed a proposal for what they call a “universal basic share” (UBS) in India. Like a UBI, a UBS would provide each citizen with regular unconditional cash transfers of an equal amount. However, in contrast to most UBI proposals, a UBS fixes the amount of these transfers to a fraction of the GDP rather than a specific monetary amount. Ray and Moene recommend that India dedicate 12% of its GDP to the provision of a UBS. They calculate that, at present, this would provide each adult citizen with a basic income approximately equal to the country’s poverty line.
At the ACEGD panel, Ray introduces the idea of UBS, after briefly outlining the present worldwide interest in UBI, precursors such as the Alaskan Permanent Fund and Dividend and the Government Pension Fund of Norway, and several sources of the present interest in UBI in India, including the pilot studies in Madhya Pradesh, the Goan permanent fund, and political and popular “exasperation” with the nation’s current subsidies for the poor. Following Ray, Moene elaborates upon the UBS proposal and some of its advantages, such as encouraging risk-taking and allowing individuals to do the work they want. Moene also replies to the common objection that a basic income would discourage work, stressing that this is not what is observed in the most generous welfare states, nor what’s observed when wealthy people receive an inheritance.
Sethi, who has studied UBI primarily in the US context, presents additional arguments in favor of the policy, including its cross-partisan appeal and its ability to mitigate economic shock due to automation. He also raises questions concerning the precise design of a UBI, such as whether the basic income should extend to minors and how it would be linked with macroeconomic policies.
The last two panelists, Himanshu and Sinha, argue that India should prioritize public spending on universal basic services, rather than simply distributing cash to individuals. About UBI, Himanshu states that the question is not whether it should be adopted, but why and when. While allowing that UBI is a good idea in principle, he maintains that it is not yet time to introduce such a policy in India, given that many in the country lack clean water, access to education, and other essential public goods. Sinha, expanding on Himanshu’s thesis, stresses that “we should not lose sight of the need to craft credible public systems” — and worries that a UBI would divert money and attention from necessary improvements of education, health, housing, and public infrastructure.
Video, Part 1: Ray, Moene, Sethi
Video, Part 2: Sethi (cont’d), Himanshu, Sinha
The five presentations were followed by a 30-minute Q&A session, touching on such topics as private versus public provision of services (which Ray eventually describes as a distraction from the real issues), immigration and basic income, UBI versus UBS during economic downturns, and others.
Video: Q&A
Reviewed by Danny Pearlberg
Photo: Delhi, India CC BY 2.0 Ville Miettinen