INDIA: Basic Income Pilot Project releases an impressive list of findings.

by Yannick Vanderborght | Aug 19, 2013 | News

Several NGOs in India have conducted a pilot project on basic income over the last two years. At a conference this May, the researchers released an impressive list of findings below. (Acronyms used below: IES, Interim Evaluation Survey; FES, Final Evaluation Survey; MPUCT, Madhya Pradesh Unconditional Cash Transfer pilot; TVUCT, Tribal Village Unconditional Cash Transfer pilot)

Implementation and Financial Inclusion

• Take-up of the basic income grants was rapid, with 93% receiving them in the first month in cash form.
• Bank account opening was challenging work for SEWA officials, but within a few months almost everybody had had bank or cooperative accounts.
• However, a majority of the villagers reported in the IES and FES that they had experienced no major problems opening bank accounts.
• Women found it easier to access and operate SEWA Co-operative accounts than the Nationalised Bank Accounts.
• The project has led to financial inclusion: Savings increased and households began using their accounts for saving, rather than keeping money at home.

Housing and sanitation

• Recipients of basic income grants were significantly more likely to make improvements to their dwellings.
• The main improvements were to walls and roofs, although improvement to latrines was also widespread.
• The basic income grants led to a switch to more preferred sources of energy for cooking.
• In the tribal village, cash grants were used by the recipients to construct new dwellings (10%), repair old houses, switch to better drinking water sources, such as getting own tube-well, and shift to better lighting.

Nutrition and Diet

• Using the WHO’s z-score index, income grants were associated with an improvement in children’s weight-for-age, with the main effect being among young girls.
• Cash grant recipients were significantly more likely than others to have enough income for their daily food needs.
• Cash grants led to more varied diets, with greater relative consumption of fruit and vegetables, rather than simple reliance on subsidised staples.
• In the tribal villages, cash grant recipients reported a sharp rise in food sufficiency. In the cash transfer village, households that reported that their income was sufficient for their food needs increased from about 50% in the baseline to 78% in the IES, and further to 82% in the FES. Correspondingly, the incidence of having insufficient food fell.
• In the MPUCT, an increase in food sufficiency was most pronounced for scheduled caste households.
• Those receiving cash grants were not more likely than others to increase spending on “private bads”, such as alcohol or tobacco. Reasons for that will be presented in the conference.

Health and healthcare

• During the course of the pilots, cash grant households reported a lower incidence of common illnesses.

• Cash grants led to more regular medical treatment and more regular taking of medicines. This was particularly observable in the TVUCT.
• Cash grants were associated with increased spending on medical treatment.
• Improved health was attributed most to an increased ability to afford medicines, although many families also mentioned it was due to more or better food and reduced anxiety. Scheduled Tribe households were relatively likely to attribute better health to the acquisition of more or better food.
• The public health system has achieved impressively high levels of immunization.
• Cash grants were associated with more resort to private healthcare, and in particular a shift from government hospitals to private hospitals.
• Although the number acquiring health insurance was small, significantly more cash grant households did so during the course of the experiments.

Impact on the Disabled

• Cash grants benefited those with disabilities even more than others, by enabling them to have more access to food and to medical assistance.
• Individualised cash grants gave household members with disabilities greater voice in how money was spent.
• Case studies showed that the cash grants enabled some disabled to become economically active, overcoming constraints to their full membership in village society.

Schooling

• Cash grants were associated with improvement in school enrolment. Although initially there was no significant difference in enrolment, by the FES the enrolment rates of children from 4 to 18 years was 12% higher in the cash transfer villages.
• Transfers led to increased spending on essentials for school, including stationery, shoes, uniforms and basic equipment.
• Cash grants were associated with more regular school attendance, with 29% of cash transfer households reporting an improvement, compared with 13% in control villages.
• Income Grants were associated with improved school performance. Grades over time taken from actual registers of schools showed that more children from cash transfer families were doing better than children of non-grant families. Scheduled-tribe households were the most likely to show an improvement in performance in terms of grades.
• By the end of the pilots, households in cash grant villages were more likely to be sending their children to private schools. Almost half of all cash-grant village children were enrolled in private school, compared with 30% in control villages.
• Cash transfers were associated with families spending more on transport to school. Grant-receiving households were more likely to send their children to schools located at a greater distance from their homes, and so spent more on transport.
• In the period covered, cash transfers were associated with an increase in private tuition. Most social categories in cash transfer villages spent more on private tuition than in other villages, except scheduled-caste families.
• Cash grants helped families to ensure that their children did non-school work that was less disruptive to their schooling. This was particularly observed in the tribal village.

Economic activity, work and production

• Contrary to a common criticism of cash transfers, cash grants were associated with an increase in labour and work.
• Cash grant households were twice as likely to have increased their production work as non-transfer households.
• Cash grants led to an increase in own-account work, and a relative switch from wage labour to own-account farming and small-scale business. This was especially true for scheduled caste households and for women workers.
• The shift from labour to own farm work was especially marked in the tribal villages.
• Many families used cash grants to buy small items for production, such as sewing machines and seeds and fertiliser.
• Cash grants were associated with the purchase of more livestock to increase production. Households in the cash-grant tribal village increased their livestock by 70%.
• Cash grant households more likely to increase their income from work, in spite of it being a difficult year due to weather conditions in the area.
• Cash grant households were three times as likely to start a new business or production activity (be it with help from firms like https://www.yourcompanyformations.co.uk/ or otherwise) as others, with a majority attributing that to the cash grants.
• In tribal village, farmers have increased their spending in good quality seeds, fertilisers and pesticides.

Debt and Savings

• Severe indebtedness was found in over three-quarters of all households.
• Cash grants were associated with a significant reduction in indebtedness, both because recipients used the money to reduce existing debt and because they used the money to avoid going into further debt. Those receiving cash grants were more than twice as likely to reduce debt.
• Cash grants led to a significant increase in savings, even in households with debt. Households often used the money to give themselves vital liquidity.
• People who looked to things like Equity Experts Debt Collector plans found that they got out of debt quicker and more effciently.

Policy Implications

• Only a minority of low-income households in all 20 of the villages had a BPL (Below Poverty Line) or Antyodaya Card. Some of the poorest households had no poverty card at all.
• Only a minority (14%) of households in the 20 villages had ever participated in MGNREGS, the government scheme supposedly guaranteeing every rural household 100 days of employment.

For more on the India Pilot projects see the following articles:
Seetha, “Bite this: Survey proves cash transfer critics wrong,” FirstPost: Economy, May 31, 2013
Standing, Guy, “The poor are responsible too,” the Financial Express, June 6, 2013
Fernandez, Benjamin, “Rupees in your pocket,” The Morung Express, 2013
Guy Standing, “Can Basic Income Cash Transfers Transform India?” BI News, May 28, 2013