The main opposition party in India, the Congress party, has just promised to implement a “nationwide minimum income for the poor”, rolling out the unprecedent scheme starting as soon as May 2019, if it gets elected. The party’s president Rahul Gandhi, has announced this on Monday, while speaking to farmers in Chhattisgarh state, where Congress was elected after promising statewide loan waivers.
Critics from the Bharatiya Janata Party (BJP), currently in power, dismiss this minimum income for the poor as a false promise from Congress, taken in a populist fever given the upcoming general elections, but Congress leaders have replied with the fact that they are fulfilling their promises on farm loan waivers in the states where they have been elected to recently. According to them, namely though BJP leader Ravi Schankar, this is just one more announcement, among many others which never saw the light of day. As Shankar speaks, though, regional leaders are fulfilling some of the Congress party regional electoral promises. Ashok Gehlot, just recently elected as chief minister of the Rajasthan region, India’s largest state located on the East side shouldered by Pakistan, just said on Monday that “whatever promises [Rahul Gandhi] made during assembly elections in Rajasthan, Madhya Pradesh and Chhattisgarth, we are fulfilling them, be it farm loan waiver or allowance to unemployed youths.”
Rahul Gandhi has firmly stated: “Nobody will remain hungry and nobody will remain poor as all poor people will be entitled to a guaranteed income. We will do this in Chhattisgarh, Madhya Pradesh, Rajasthan and all other states as well. All you have to do is to give us an opportunity”. Particulars have not yet been revealed (for instance, what are the parameters defining “poor” in India), but this announcement from Congress comes on the wake of the 2016-2017 Economic Survey, which suggested the implementation of a basic income to support the bottom 75% of the population in terms of income. In that document, the scheme’s realization would include the rollback of several (conditional) subsidies.
Running up these last months to the general election, spirits are agitated. There has been speculation on whether Narenda Modi and his government would attempt to implement a nationwide basic income on this week’s presentation of the interim budget, as a response to farmers protests all over the country. That led some to think that Ghandi’s move was meant as a strike to turn the table and get Congress one step ahead facing the impending elections. Could be. However, government officials are sceptical about how to finance such a bold policy, without cutting on State essential services and unleashing “runaway inflation”, which discourages the belief that government will make history in only three months.
As expected, the Congress party leadership was quick to support Gandhi’s announcement, with messages and statements from Chidambaram, Sheila Dikshit and Bhalchandra Mungekar, all Congress heavyweights (Chidambaram occupied ministerial positions for ten years, from 2004 and 2014, and Sheila was the longest serving Chief Minister of Delhi). Chidambaram as stated that “the poor in India have the first charge on the resources of the country and the party will find the resources to implement the promise of Rahul Gandhi.” He has been nominated the Congress Manifesto chairman for the 2019 elections, steady on the belief that “now we should make a determined effort to wipe out poverty in India”.
Chidambaram. Picture Credit to: The News Minute
Whoever gets to implement basic income in India, the proposal as it stands seems to be framed as a Negative Income Tax (NIT), since it is being direct to the poor. Arguably, the financing mechanism will expectedly use taxes and savings on welfare schemes to make direct cash transfers to those who fall below a certain poverty threshold. The next few months will be critical to Indian politics, and probably to the world’s social landscape. Right now, all eyes are on India. Sarath Davala, a long-standing basic income activist in India and internationally, has stated on Facebook:
“Indian National Congress, the main opposition party now announces Basic Income to the poor. Details are yet to be worked out. I cannot ask for more. Ironically though, our real challenge begins NOW – translating the idea plus evidence into concrete national policy without diluting the spirit of basic income.”
Indian farmer pouring fertilizer. Picture credit to: The National
As indicated before, there is political movement in India in the direction of basic income. Particularly in the state of Telangana, which started the implementation of its Rythu Bandhu (Farmer Investment Support) program in May 2018. Other Indian states, namely Maharashtra, Rajasthan, Madhya Pradesh, Jharkhand, Odisha, and Chattisgarh, have also introduced farm support initiatives, but Telangana conveyed the novelty of unconditionality. Sarath Davala, Vice Chair of the Basic Income Earth Network (BIEN), and coordinator of the India Network for Basic Income (INBI), has written extensively on this matter, as well as contributed with clarifications and specifications on social media.
In a nutshell, the current Rythu Bandhu program in Telangana, features the following characteristics:
1 – It is universal. All farmers with a land property registration are entitled to 4000 Rupees (50 Euros) per acre per season, making it 8000 Rupees (100 Euros) per annum. Cheques or money transfers were made directly to farmers bank accounts;
2 – It is unconditional: no conditions were prescribed. The farmer needn’t even cultivate. It is left to the farmer what he / she wants to do;
3 – It is called Farmer Investment Incentive Scheme. It was not called welfare, but termed as an investment. This means that, unlike conventional welfare schemes, such as loan waivers or crop insurance scheme, it is not intended as a relief after a calamity has hit, but as an investment.
Telangana has also introduced state-financed life insurance for farmers, over 5,8 million potential beneficiaries, and covering a sum of 500 000 Rupees (6190 Euros). The annual premium, paid by the government, is to be 2000 Rupees (25 Euros). Normally, if anyone wanted life insurance, they would have to visit a particular website to buy a policy, but now, the government is implementing these policies themselves.
This first attempt at unconditionality has had its problems, though. The program was criticized for being regressive, since no account was made for redistribution of these benefits to farmers, and so rich farmers were also getting the money from the government. And, since these farmers owned more land, they receive a greater portion of the investment. Another downturn was that tenants, or landless farmers, haven’t benefitted from the program since these do not possess property rights.
To address this last problem, the state of Odisha has announced in December 2018, and will roll out the scheme between February and March this year, pretty much the same as in Telangana but including landless tenants, estimated to cover around 1 million people (and their direct families). Under Odisha’s scheme, there are also available loans (for crop) at zero interest rates. In Jharkhand, Odisha’s neighbour state up North, the farmer assistance plan also disburses a fixed unconditional value per acre of cultivable land, 5000 Rupees (62 Euros) per annum, directed at small farmers (owners of less than 5 acres), for the next 4 years, benefitting over 2 million workers. So, in Jharkhand, rich farmers will be mostly excluded from the scheme. On the border with Bangladesh, in the West Bengal state, the scheme is somewhat more complex. Starting in February 2019, there will be a crop insurance for farmers land, with the state covering its premium. Plus, the same cash transfer as in Odisha will be rolled out, but with spending conditions (on seeds, fertilisers, pesticides, etc.). On top of that, a life insurance similar to Telangana’s, but covering only 200 000 Rupees (2470 Euros). West Bengal state farmer support scheme is directed at an estimated population of 7,2 million small and marginal farmers.
Other states, like Maharashtra, Rajasthan and Madhya Pradesh, have also announced and are implementing policies to help farmers, namely in-kind benefits and loan waivers. But, overall, and according to Sarath Davala, is it a very positive thing to “see a shift from many conditionalities to unconditional”. However, he points out that these policies should not be lightly called “basic income”, as they depart in several ways from definitions of basic income (as, for instance, that of BIEN). Telangana’s policy is neither individual (it is family-based), nor universal (only for farmers, and not even for all of them), nor basic (not enough to cover individual basic needs). However, it does go a step further as far as the unconditional part is concerned.
The State Bank of India (SBI) has also taken an interest in unconditional cash transfers to farmers, although at the expense of the universal basic income (UBI) policy, as presented in a recent report. The SBI confirms that unconditional cash transfers will have a more “meaningful impact” on farmers, than conditional policies applied up to now. However, it advices against UBI, stating that a “cash transfer scheme is always a better option than a UBI scheme. Many countries have found that UBI does not address the structural problems and is at best a solution in interregnum”. It remains unclear, though, how did the SBI found that one policy is superior to the other, in the lack of real UBI implementation around the world. Also, the SBI does not mention which “structural problems” UBI was found not to solve, and in which countries.
Farmers in India are under considerable stress. Uncertainty regarding weather, yield, prices and revenue, create the perfect conditions for distress and fragility over the exposure to shark lenders. That also means that massive hunger is a risk just around the corner, and in a year of elections in India, its rural population (about 70% of total population) is repeatedly targeted for campaign purposes. Loan waivers, for instance, have been a pet political tool for election purposes, even though waivers haven’t traditionally helped small or marginal farmers (around 80% of all farmers).
To counteract this state of affairs, some states in India start to take matters in their own hands. The province of Telangana has been the first Indian state to provide and unconditional cash transfer to farmers. This, the decision of the Sikkim state to go forward with basic income implementation, experimentations popping up in several parts of the world (e.g.: Germany, Ukraine, United States, Spain), and some political support for basic income over central government in New Dehli, particularly after the 2016-2017 economic survey and its famous chapter on basic income, leads to renewed conversations in India.
In programs like this one, provocatively titled as “Government mulls universal basic income, is India ready for income for all?”, obstacles to basic income seem more in number and in size, than opportunities and benefits it can potentially provide. TV pundits take turns at criticizing the idea: it disincentivizes work, it is unaffordable, it is vague and populist, it cannot possibly be a replacement for long-time and traditional forms of help to those in need. However, simultaneously, some high placed economists and politicians see at least some advantages and viability in a basic income for all Indians, or directed to certain population cohorts (such as farmers). The dice are rolling.
Sarath Davala. Picture credit to: BIEN
Sarath Davala, coordinator at India Network for Basic Income (INBI), has written on Facebook: “Increasingly I am beginning to think that India could be the first country to take the plunge into a kind of Targeted Basic Income. It won’t be universal, but it will certainly be unconditional. The initiative is more likely to come from the provinces”. Guy Standing, also a long-time activist and researcher on basic income and someone who has been deeply involved in the Indian (basic income) experiments, has also pronounced himself at the onset of India’s first steps towards this revolutionary policy: “The beauty of moving towards a modest basic income would be that all groups would gain. That would not preclude special additional support for those with special needs, nor be any threat to a progressive welfare state in the long-term. It would merely be an anchor of a 21st century income distribution system. Will the politicians show the will to implement it? We need to see”.
Flowers, on the way to the mountain. Picture credit to: Rookie’s Journal
Sikkim, the second smallest state in India, has grown a reputation, over the years, for environmental consciousness, ethnical diversity and tourism. It is also the home of one of the most educated people on Earth, with a 98% literacy rate. Moreover, in the last couple of decades, policies in the state have been implemented in order to reduce poverty, which presently sits below 8% (from a 41,4% in 1994). The Sikkim Democratic Front (SDF), the democratically elected party governing the state since 1994, has written basic income into its manifesto for the 2019 Assembly elections, and aims to have it implemented by 2022.
SDF’s MP in New Dehli’s Lower House of Representatives (Lok Sabha), Prem Das Rai, has said that “our party and Chief Minister Pawan Chamling (…) are committed to bringing in Universal Basic Income. This, we will do three years of coming back to power in the state”. This initiative is not intended as a pilot test, but as an actual implementation, hence Prem Das Rai words: “Basically, it’s an income given to families irrespective what do they do. In Sikkim, it will be for everyone and every household.”
As for financing the basic income scheme, SDF officials are considering surplus energy generation revenue (from hydropower) and redirecting costs from welfare programs which cease to be relevant. Restructuring the tax edifice and using tourism revenues are also future financing routes to cover for basic income. In any case, Prem Das Rai is confident that this is “not just a feasible idea, but a very positive idea”.
About this issue, basic income activist Scott Santens has written, on Twitter: “What makes this news so big in my opinion is the fact they’re talking about full universality, unlike what’s being discussed at the national level right now, where cash may be targeted to the poorest 33% of the country and thus not actual UBI. This news out of Sikkim is actual UBI.”
Indian woman worker with spectacles. Picture credit to: Sarah Day
New ideas seem to be running dry in the Indian political context. Within Congress, Government (BJP – Bharatiya Janata Party) and opposition parties (ex.: AAP – Aam Aadmi Party). Tweaking with the minimum support prices for food production and/or with the multiplicity of welfare programs is not going to substantially change rural population’s main concern, which is declining real wages (purchasing power after adjustment for price variations). These have been steadily falling since 2014, ever since the BJP came to power, which means that to stay too focused on the former issues will not probably get BJP reelected this year. Also farm loan waivers (credit write off) has been used as a political tool, especially by the opposition (mostly center and left-wing) parties, given the high indebtedness rates of rural families (over 50%) and their dependency on predatory lenders (also over 50%).
However, according to political analyst Saubhik Chakrabarti, from The Economic Times, loan waiver is not going to be decisive for these next elections, even though it has been flagged by the opposition in regional suffrage (which has won three states from BJP). This decisiveness might very well come from pushing the basic income policy, an old new idea that has been hot in India ever since the 2016-2017 Economic Survey Report featured a whole chapter to it. And this applies to both parties / coalitions with a shot at forming a government in 2019, because what really impacts real wages is not topping crop prices or forever trying to fix a broken welfare distribution system (very complex and prone to corruption). A real difference may come from directly and unconditionally giving people what they need the most, economically: money.
Even though there will be no time to properly design, let alone implement a basic income scheme regionally – and even less likely a national implementation – before this year’s elections (latest in May), Chakrabarti suggests that one or more pilot tests could be tried out. According to him, that could be done “in chosen districts, accompanied by a blaze of political publicity, [being] enough to take to voters, with the promise that re-election will lead to an across-India UBI program.”
