by Kate McFarland | Dec 15, 2016 | News
The idea of a universal basic income (UBI) is rising in popularity in India, where it is often seen as a way to streamline and expedite the distribution of aid to the poor, avoiding the corruption and wastefulness that plague current social welfare programs.
In a recent article for LiveMint, the economist Himanshu (Associate Professor at Jawaharlal Nehru University) contrasts this view of UBI with its perception in developed nations that enjoy mature welfare states, such as the Nordic countries. Himanshu contends that developing nations are more likely view UBI as substitute instead of a supplement to existing programs.
He goes on to argue that, contra extreme forms of the “substitution” view, even developing nations such as India should adopt UBI only if it is accompanied by other reforms aimed at improving and increasing the availability of public services:
Given the huge deficits in availability of public education and health facilities, UBI can only increase the demand for these services without increasing the access to these services. While dependence on private providers may fill the gap in the long run, it does not absolve the state from providing universal provision for these services.
Himanshu states that UBI can promote better social and human development outcomes only given “adequate provision of basic social services”.
The article is clear to differentiate the question of universal/targeted transfers from that of cash/in-kind transfers. Leakages and corruption, he says, are problems that accompany targeting, and they have been largely eliminated in states that have shifted to universal provision of services. Yet this leaves open the question of whether the universal benefits ought to be provided in-cash, in-kind, or both.
For more contributions to these debates, see the recent articles by Maitreesh Ghatak, Abhijit Banerjee, Pranab Bardhan, and Vijay Joshi. Some of these economists, like Himanshu, stress that a UBI must supplement, rather than replace, other social services. At the same time, the inefficiency of the present welfare system is a clear common theme in their work.
Reference
Himanshu (November 8, 2016) “Is India ready for universal basic income?” LiveMint.
Reviewed by Genevieve Shanahan
Photo: Free medical camp held in India CC BY-ND 2.0 Welfare party
by Kate McFarland | Dec 3, 2016 | News
Baijayant “Jay” Panda, a member of the lower house of the Indian Parliament (Lok Sabha), believes that India should consider a universal basic income (UBI) to replace its current social welfare programs.
Panda describes India’s current socials programs as “grossly inefficient, corruption-ridden, misdirected towards the better-off, and thus unable to achieve stated objectives”. These wasteful programs already need replaced. With this in mind, Panda argues that a UBI could be more affordable in India than in a high-income nation like the United States or Switzerland–citing economists such as Pranab Bardhan (University of California, Berkeley), Vijay Joshi (Oxford), and Maitreesh Ghatak (London School of Economics) for additional support. (One might additionally mention Abhijit V. Banerjee, an MIT economist and adviser for GiveDirectly’s basic income pilot.)
Jay Panda belongs to Biju Janata Dal (BJD), a centrist party in the state of Odisha. BJD holds 20 out of 545 seats in the Lok Sabha, having won 20 out of 21 seats for Odisha in the 2014 general election, and eight out of 245 in the upper house (Rajya Sabha). BJD is the dominant party in the Odisha legislature, where it holds 117 out of 147 seats. Panda is a member of the Parliamentary Standing Committee on Commerce and the Consultative Committee for the Ministry of Human Resource Development.
Earlier in 2016, Varun Gandhi, MP from India’s ruling Bharatiya Janata Party, endorsed basic income in an article for The Hindu.
More recently, India’s Chief Economic Adviser, Arvind Subramanian, has stated that the government will investigate UBI as part of the next annual Economic Survey of India.
Read More:
Baijayant ‘Jay’ Panda (Oct 27, 2016) “Cash To All Citizens: Universal Basic Income could actually work better in India than in rich countries” Times of India.
Reviewed by Genevieve Shanahan
Photo: Baijayant ‘Jay’ Panda speaks at Brookings panel, CC BY-NC-ND 2.0 Brookings Institution.
by Kate McFarland | Nov 24, 2016 | News
The Goenchi Mati Movement advocates for the reform of mining practices in the Indian state of Goa. Its proposals include the investment of all money from iron ore mining into a permanent fund, which would be used to finance a citizen’s dividend.
Similar to Alaska’s Permanent Fund Dividend, the fund’s income would be distributed equally to all citizens in the form of an unconditional cash grant, providing all Goans with a basic income.
Founded in 2014, the Goenchi Mati Movement (GMM) aspires to reform mining practices that it believes to deprive residents of Goa their deserved share of the natural resources in their homeland, while also rapidly depleting these resources and damaging the environment. Describing the state’s mining practices, the GMM’s Manifesto says, “The total loss was enormous: nearly twice the state revenues, or over 25% of per capita income, or thrice the poverty line. The loss was effectively a per head tax equally on everyone. A few have become rich from our children’s inheritance. This is clearly not a reasonable situation.”
While iron ore mining has a long history in Goa, it expanded rapidly during the mid-2000s, and quickly became plagued with malpractice and illegal activity. In September 2012, the Supreme Court of India temporarily suspended mining in the state while hearing a public interest litigation. In its final judgement in April 2014, the Supreme Court declared all mining activities to have been illegal, largely due to mining companies’ lack of valid leases and licenses.
The environmental action group The Goa Foundation submitted a series of letters to the government of Goa in 2014, wherein it demanded the recovery of losses due to illegal mining and a restructured mining system based on the Goenchi Mati Principles. However, the government did not respond and began renewing the leases of Goa’s iron ore mines near the end of the year. By early 2015, the government had renewed the leases of 88 mines.
The GMM Manifesto
The Goenchi Mati Movement has published a Manifesto that outlines its proposal, which centers on six core principles (bold typeface in original):
1. We, the people of Goa, own the minerals in common. The state government is merely a trustee of natural resources for the people and especially future generations.
2. As we have inherited the minerals, we are simply custodians and must pass them on to future generations.
3. Therefore, if we mine and we sell our mineral resources, we must ensure zero loss, i.e. capture of the full economic rent (sale price minus cost of extraction, cost including reasonable profit for miner). Any loss is a loss to all of us and our future generations.
4. All the money received from our minerals must be saved in the Goenchi Mati Permanent Fund, as already implemented all over the globe. Like the minerals, the Permanent Fund will also be part of the commons. The Supreme Court has ordered the creation of a Permanent Fund for Goan iron ore and already Rs. 94 crores [about 3.8 million USD] is deposited.
5. Any real income (after inflation) from the Goenchi Mati Permanent Fund must only be distributed to all as a right of ownership, a Citizen’s Dividend. This is like the comunidade zonn, but paid to everyone. [The comunidades of Goa are traditional villages in which land is owned collectively. Comunidades pay an annual dividend, called the zonn, to residents.]
6. The implementation of these principles will be done in a transparent participatory process with the people of Goa.
The GMM launched its Manifesto at a press conference on Monday, November 21, and hopes soon to publish it in multiple languages, as well as to develop a variety of supplemental materials (e.g. animated explainer videos, video-based FAQs, and even songs and street theatre).
GMM’s Claude Alvares and Rahul Basu at press conference
The Permanent Fund and Dividend
As stated in the manifesto, an important first step towards the creation of a Goan iron ore permanent fund is already in place: in April 2014, the Supreme Court of India issued an order that mandated the establishment of such a fund, which presently holds Rs 94 crores (or about 3.8 million USD). Commenting on the significance of the permanent fund, Rahul Basu of the GMM states, “It is, to our knowledge, the first such permanent fund on intergenerational equity grounds to be ordered by judicial pronouncement. If it stands up to the legal challenges, which will then also clarify some aspects of the order, it can become a global legal precedent, which makes it potentially very powerful.” However, the Supreme Court’s order did not require that the permanent fund be used to finance a citizen’s dividend.
GMM Workspace
According to the Goenchi Mati Movement, the citizen’s dividend is a crucial component of the mining reforms for several reasons. First, it gives Goan citizens a stake in the minerals in their land, creating a stronger bond between the citizens and the commons (as one of GMM’s blog posts puts it).
Second, it leaves the government without money from the sale of the state’s minerals. In the absence of money from iron ore, the government might then be forced to tax its citizens to raise revenue. Following thinkers like Daron Acemoglu and James Robinson (the authors of Why Nations Fail), GMM argues that this change would promote good governance: “If the government wants to do all the various good things that need to be done, let them make a case to the people directly. If the people feel the government is good, they will agree to whatever new tax is imposed.”
Third, it compensates for what GMM sees as a bald injustice. As Basu describes it, any appropriation of parts of the commons–such as minerals and the land containing them–is effectively a “per head tax” or a “negative UBI” (that is, a practice that takes a share of resources away from every citizen).
Further reflecting on the moral significance of the dividend, Basu comments:
“Fundamentally, we are turning a lump sum mineral into a perpetual stream of Citizen’s Dividend. The Citizen’s Dividend today is given equally to everyone, achieving intragenerational equity. The perpetual nature of the Citizen’s Dividend achieves intergenerational equity. In a sense, each generation benefits to the extent of the real income. From this, we get to a practical example of the Golden Rule (the principle of treating others as one would wish to be treated oneself), but even across generations.”
GMM has been influenced by the model of Alaska’s Permanent Fund and Dividend, and also considers itself closely aligned in its thinking with Our Children’s Trust, an Oregon-based organization that promotes global action for the adoption of carbon tax and dividend policies.
Speaking about GMM, BIEN co-founder and honorary co-president Guy Standing said:
This is the optimum way of promoting community development while giving every man, woman and child a sense of basic security and pride in their community. It is enlightened, it is sensible, and it is eminently feasible.
Goan State Elections
With state elections to take place in early 2017, the Goenchi Mati Movement is urging Goans to vote only for politicians who will implement its Manifesto, and is currently devoting much of its attention to this political action.
As other sources confirm, mining policy is expected to be a central area of debate in the 2017 state elections. The Aam Aadmi Party (AAP), a relatively young party in Goa, promises sustainable mining practices, while meanwhile calling for a doubling of the mining cap. Meanwhile, environmental groups such as the Goa Foundation oppose the AAP’s plans, calling for greater restrictions.
The two major parties in India, the Bharatiya Janata Party (BJP) and the Indian National Congress, were in power during the controversial and illegal practices documented by the Goa Foundation — the Congress while the illegal mining practice themselves were occurring, and the BJP when the leases of the companies were renewed.
GMM states, “We urge whichever Government is elected in 2017 to immediately cancel the leases and reframe a fair and just mining policy for the people of Goa. We request the Public to join our campaign, fight for what is rightfully theirs and urge them to vote for those politicians that will change the system.”
GMM has produced a short video to emphasize this message:
Other Activities
Outside of direct political action, the Goenchi Mati Movement has been adopting other strategies to raise awareness of its vision. For example, on November 11, it sponsored an art show intended to promote reflection on the shared inheritance of the citizens of Goa. While this initial show was centered on paintings, GMM plans to host a second art show featuring cartoons, and third featuring photography.
Basu states, “Artists are at the leading edge of thinking, and they influence the masses in subtle and long term ways.”
Scenes from GMM’s Art Exhibit
Additionally, the Goa Foundation is engaging in litigation — a challenge to the structure of the Goan permanent fund (including the demand for citizen’s dividend), and a challenge to the 2014-15 lease renewals of the mines — and beginning to undertake academic research.
GMM Members at Create-a-Thon
BI-Related Reading from GMM
Rahul Basu and Deepak Narayanan (August 3, 2016) “Viewpoint: What can we learn from a campaign for zero-loss mining in Goa?” Citizen’s Income Trust.
Connects the activities of the Goenchi Mati Movement to the worldwide movement for basic income. Published on the blog of BIEN’s UK affiliate, the Citizen’s Income Trust.
Goenchi Mati (September 20, 2016) “Why should all mineral receipts be saved in the Permanent Fund?”
Argues that mineral receipts should be saved only in a permanent fund.
Goenchi Mati (October 28, 2016) “Why a Citizen’s Dividend? Why only a Citizen’s Dividend?”
Addresses the counterargument that some of the revenue of the iron ore permanent fund should go to the government instead of directly to the citizens.
Longer Video on the Goenchi Mati Movement (22:59)
Thanks to Rahul Basu for supplying information and photos, and for reviewing an earlier draft of this article.
Cover Image CC Frederick Noronha
by Jasper van den Bor | Nov 15, 2016 | News
Maitreesh Ghatak is a professor of economics at the London School of Economics, and regularly writes about economic and political issues with a specific focus on India. He begins his search for an answer to the question posed in the title of this piece by noting the multitude of poverty alleviation programs already active in India and their various successes and drawbacks. One possible solution arising from a broad societal debate on these issues is a Universal Basic Income (UBI). A UBI, thanks to its unconditional nature, would address two of the biggest problems with conventional programs – exclusion error (people not receiving a benefit who should) and inclusion error (people receiving a benefit who should not).
Ghatak continues by discussing some possible catches to the UBI approach. A universal program, such as UBI, would most likely be expensive and require spending cuts or increased taxes so as not to add to the fiscal burden. Ghatak notes, however, that increasing the tax base in India is a necessary fiscal reform for development, regardless of whether UBI is adopted. Furthermore, he notes, recent experience with implementing cash transfers in several states has been sobering, but these are logistical issues, in Ghatak’s view, rather than fundamental problems with cash transfers. Finally, Ghatak mentions the common worry that the poor might not spend such money wisely, and directs the reader to evidence that such concern is unfounded. Ultimately, he sees none of these potential issues as insurmountable, offering various counterarguments.
The article concludes by mentioning a number of standard argumentative pitfalls in discussing UBI, and offers the following advice to those evaluating its desirability:
- All policies have their pros and cons, so it is important to focus on their relative costs and benefits.
- One size does not fit all. We should be open to the possibility that different policies could work well in different contexts.
- There is no magic pill that will cure all problems. As Ghatak aptly puts it: “To give an analogy, giving certain nutritional supplements may help a person who is ill to gain some strength, but it will not cure any disease, nor will it make the person an athlete.“
Maitreesh Ghatak, “Is India Ready For A Universal Basic Income Scheme?” www.ndtv.com, August 26, 2016.
by Kate McFarland | Nov 6, 2016 | News
In the last week of September 2016, the website Ideas for India published a symposium on universal basic income, featuring essays by six well-known Indian economists.
The e-symposium was conducted by Parikshit Ghosh, Professor at the Delhi School of Economics. Contributions are as follows:
• Pranab Bardhan (University of California, Berkeley) “Basic income in a poor country“
In his contribution, Bardhan allows that a universal basic income might be unaffordable in rich countries like the US and UK. But he argues that, nevertheless, a UBI is both feasible and desirable in India. Specifically, he considers a basic income set at about 75 percent of the poverty line, which would replace some but not all welfare programs. (Bardhan mentions public education, healthcare, childhood nutrition programs, and public works employment guarantee programs as ones that are important to retain.)
In addition to countering the argument that basic income would not be affordable, Bardhan responds to the objections that the policy would undermine the value of work and that poor individuals would squander their money. He admits, however, that gaining political support poses a struggle.
Bardhan’s article is an updated and extended version of a piece written for Project Syndicate in June.
• Abhijit Banerjee (Massachusetts Institute of Technology and GiveDirectly) “Universal basic income: The best way to welfare“
Banerjee’s essay is a reprint of a piece initially published on the Indian Express in June, framed in the context of the defeat of the Swiss referendum on basic income. Banerjee argues that, despite the failure of the Swiss referendum, the debate on basic income is not over–and, specifically, India should consider UBI as a way to reduce bureaucracy and make the welfare system more efficient.
• Maitreesh Ghatak (London School of Economics) “Is India ready for a universal basic income scheme?“
In his article, originally published on NDTV, Ghatak argues that India can afford a basic income–specifically, one sufficient to bring every Indian above the poverty line–by cutting subsidies, reducing wasteful spending, and reforming the tax code. He maintains, additionally, that a basic income is not a silver bullet to eliminate poverty, and would need to be introduced in addition to (rather than in place of) other anti-poverty programs and strategies.
• Debraj Ray (New York University) “The universal basic share“
Ray develops a proposal for what he calls a universal basic share in India: a policy in which a fixed percentage of the country’s GDP is set aside to distribute to residents in the form of individual cash transfers. He admits that he has “no clue whether we have the political will to pull something like this off” but is hopeful that the ability to start with small shares might make the policy more tractable politically.
• Kalle Moene (University of Oslo) with Debraj Ray “The universal basic share and social incentives“
In a jointly authored piece with Moene, Ray expands upon the projected benefits of a universal basic share (UBS)–for social cohesion, economic growth, and even possibly sustainable development. They argue, moreover, that UBS can accomplish some of these goals more effectively than UBI.
• T.N. Srinivasan (Yale University) “Minimum standard of living for all Indians“
Srinivasan revisits a minimum income policy that was debated in India during the 1960s.
Reviewed by Robert Gordon
Photo CC BY-NC 2.0 Rishi Bandopadhay
