by Yannick Vanderborght | Apr 9, 2012 | Opinion
The BRICS Heads of State Summit in Delhi this week presents an excellent opportunity to launch some joint initiatives that would help promote the aims of the meeting, security and stability. Among those, one stands out that could easily be sidelined.
The leaders of India, Brazil, China, Russia and South Africa face a common challenge arising from the fact that their economic growth is leaving a large number of people languishing in dire poverty and economic insecurity. Each country has adopted very different approaches. Without doubt, Brazil has done best, and India, China, Russia and South Africa would be well advised to learn lessons from its experience.
For dealing with poverty, India has relied heavily on hugely expensive subsidies, primarily through the Public Distribution System (PDS). Most of the money poured into those schemes goes astray. Nearly three-quarters of PDS never reaches the poor. Inequality has worsened as well, as it has in China, Russia and South Africa in recent decades.
In China, the share of national income going to capital has risen by twenty percentage points in just over two decades. The Chinese leadership is acutely concerned about the persistent poverty threatening the sustainability of their growth model, marked by a rising incidence of social protests. South Africa has also fared badly, with sluggish economic growth being combined by the persistence of high poverty, chronically high unemployment and shocking inequality.
By contrast, Brazil under President Lula transformed their social protection system to rely extensively on cash transfers, notably its scheme of Bolsa Familia, which since its introduction in 2003 has reached over a quarter of all Brazilians, over 50 million people. In that time, poverty has declined, income inequality has fallen considerably, economic growth has risen while it has fallen in the other BRICS countries as well as in the G20 area in general, and unemployment has fallen to its lowest ever. And women and children have done particularly well.
Cash transfers have been hailed as a primary reason for these successes. President Dilma Rousseff is committed to continuing on that road. There is even a law on the statute books committing the government to introduce a basic income for all as and when economic conditions allow it.
The Bolsa Familia is nominally a conditional cash transfer scheme, providing monthly payments conditional on children attending school and having regular medical check ups. In practice, these have moved to “co-responsibility” commitments, obliging local agencies to provide better facilities as much as being policing mechanisms.
Meanwhile, India has slowly moved into a phase where the Planning Commission and others are more open to use of cash transfers. Regrettably, polemical criticisms have been holding up dispassionate debate. Cash transfers do not rule out other schemes, such as labour projects such as MGNEGS. Nor do they mean government should roll back its development of social services.
At the moment, several experimental cash transfer schemes are in progress in various states. These have been done mostly by non-government bodies, such as SEWA. Lessons learned are mainly positive. But Indian officials and their colleagues in China, Russia and South Africa should organise a joint assessment of the design of cash transfers, drawing on the Brazilian experience, and that of other Latin American countries.
The issue of cash transfers is closely related to one other theme that is scheduled for discussion, financial initiatives. Cash transfers are linked to the need for financial inclusion, an imperative that concerns all five countries. Unless the poor, the emerging precariat and all rural residents are enabled to be part of the money economy, their plight will continue to deteriorate. In this respect, lessons are to be learned by all the BRICS countries, and here India has some recent encouraging experience to pass to their colleagues.
Guy Standing is Professor of Economic Security, University of Bath, England. He is the author of Cash Transfers in India: A Review of the Issues, just published by UNICEF, New Delhi.
by Karl Widerquist | Apr 8, 2012 | News
The Basic Income pilot project in India, conducted by the Self Employed Women’s Association and the India Development Foundation, has been making progress and may provide interesting statistical data in the future, according to information by Guy Standing, professor of economic security at the University of Bath and co-president of the Basic Income Earth Network (BIEN), who has also operated as advisor for the project. The project consists of three components:
1) The aim of the first component is to explore effects of unconditional cash transfers on a larger scale. 4,000 individuals in eight villages have been given a monthly unconditional cash transfer for 12 months regardless of their poverty status, employment status, age and gender. The setup of the trial also includes control villages to measure occurred effects. Due to inhabitants of these control villages do not receive any cash transfers, these villages enable researcher to recognize effects of performed cash transfers in implemented surveys. One survey was conducted in the beginning, a second one in the middle of the trial. A third and final survey is planned to conclude the first component of the project.
2) This part of the project aims to compare effects of unconditional cash transfers and subsidized ration shops. In the beginning of the project, participants were given the choice between both. They have then received support in accordance to their choice for one year. Occurred effects have been monitored in both groups.
3) The third component of the project focuses on effects of an unconditional basic income in a tribal village. Every inhabitant has been received a monthly paid cash transfer. Two surveys are part of this component. One survey was conducted before cash transfers were performed. The second survey will be conducted in June. A comparison of both surveys will then disclose effects of an unconditional basic income.
Related information can be found at:
https://binews.org/2011/09/india-basic-income-pilot-projects-are-underway/
by Citizens' Income Trust | Jan 30, 2012 | Opinion
This interview with Guy Standing first appeared in The Times of India, Crest edition, 9th July 2011, and we are grateful for permission to reprint it. For the original interview, please see www.timescrest.com/opinion/social-insurance-is-not-for-the-indian-open-economy-of-21st-century-5775. The interview was conducted by Rukmini Shrinivasan
You have become a strong advocate of cash transfers. Why so?
From my point of view, cash transfers are an essential pillar of a comprehensive social protection system. Social insurance was for an industrial society; it’s not for the Indian open economy of the 21st century. You can’t have unemployment insurance – it doesn’t reach the poor. You can’t have a means-tested system because we’ve seen the problems with it. So, you’re going to need to have some basic income transfer. The technology to do it is rapidly emerging – in some respects, India is becoming a world leader in this – and rolling this out within the next few years is certainly within the capabilities of the Indian state, if there was a will to do so.
I think cash transfers should be seen as whether they’re good or bad in themselves. They should not be discussed as an alternative to any specific policy. I do not think it is fair or correct to see this debate around cash transfers as a substitute for something else such as the public distribution system (PDS). I may have my criticisms of the PDS but they are separate from the reasons why I think cash transfers are good.
That may apply to cash transfers in general, but a general income cash transfer is not on the policy table in India right now. The only cash transfers that are being discussed within the government are those that replace subsidies.
I agree, but then there should be a proper debate. Clearly, there are chronic inefficiencies in the existing subsidy system. It goes right across the board, and anybody who defends that system is just charging against a volume of evidence that says it is chronically inefficient and inequitable and it is not solving poverty. The Prime Minister knows that, Sonia Gandhi knows that. If we know that there are very good reasons why a scheme doesn’t work, then it is intellectually reprehensible to continue in that direction.
But many of the problems in the PDS can be traced to targeting. The state of Tamil Nadu, which has a universal PDS, has both the best record of reaching beneficiaries and the lowest leakages. Why then are cash transfers the natural direction in which you look, rather than universalisation of the PDS?
I don’t know enough about Tamil Nadu, so I’m not going to say anything. Sure, you could universalise if that’s what works. But, I don’t think that’s an argument against cash transfers.
Even if it’s a targeted or conditional cash transfer, as is currently being proposed in India?
I really hope that the conditionality issue can be defeated; I think that’s the wrong way for India to go. One just imagines the scope for corruption and inefficiency; the mind boggles. I also hope that the simplicity and transparency of cash transfers will be appreciated for what it is. I hope that policy makers will look at food security as just a small part of overall security. We saw food security improve dramatically in a universal cash transfer pilot programme in Namibian villages as a result of not handing out food, but people having cash by which they could buy seeds and grow things.
You and the BIEN repeatedly talk of a universal income transfer. However, when this is operationalised by countries like Brazil, they do impose conditions and targeting. Isn’t it disingenuous to continue to talk of a universal income transfer when countries take up only a targeted version?
The whole of my professional career, I have advocated universalised and unconditional social protection and cash transfers. You are right that in Brazil, it was not only targeted in trying to reach just the poor, but it was also selected in trying to reach just women. It was not universal and it was conditional. The realisation was that the conditionality – sending kids to schools and attending clinics – was merely helping to legitimise the cash transfers among the middle class. But in 2004, Brazil passed a law committing the government to implement a universal, unconditional cash transfer for the whole population. The objective has been to roll it out and the number of beneficiaries has risen from 11 million to 60 million and the conditionality is being faded out. I foresee that something like that could happen in India.
What was the impact of the basic income cash transfer pilot in Namibia that you were a part of?
Child school attendance went up dramatically, use of medical clinics went up. Those with HIV/ AIDS started to take ARTs (Antiretroviral Therapy drugs) because they’d been able to buy the right sort of food with the cash. Women’s economic status improved, and the economic crime rate went down. Income distribution improved. This is very relevant in India because with your existing handout of goods and even with NREGA, you don’t alter the structure of local economies; in fact, you almost rigidify them. If you provide an equal amount of cash to all members of a community, you are automatically giving proportionately more to the poor. If you do that, you release the constraints that are on the lower income groups – they can pay off their debts, they can take risks, and they can buy things that they need for petty production.
Are there pilot schemes going on in India?
Social protection policy develops best when it builds on pilots, because pilot schemes allow institutional learning. There is no one-size-fits-all solution. The scheme that may evolve in the Indian context may be unique – we don’t know yet. But what would be sensible is if there were calm, collected, quiet pilot schemes that were tried out with good principles, were professionally advised, developed, and implemented – without fanfare, without misrepresentation. I’m afraid that at the moment, the political polemic is making sensible piloting harder. Too many people are posturing and are keen to disrupt sensible, well-meant pilots being conducted. It is not in the interests of anybody that pilots be disrupted or prevented. The Delhi situation seems to have fallen into that trap and I think it’s very sad.
The Delhi Pilot
The Delhi government, in 2010, appointed the Self Employed Women’s Association (SEWA) and the India Development Foundation to conduct a pilot study into cash transfers as a possible alternative to the Public Distribution System (PDS). The pilot, which began in January 2011, will run for one year in West Delhi’s Raghubir Nagar slum.
100 households volunteered for cash transfers and will receive Rs 1,000 per month but will have no access to the ration shop. Another 100 volunteer families will only get a bank account and will continue to use the ration shop. The third volunteer group of 150 families will neither receive cash nor a bank account and will have to use the ration shop. The last group is of 150 families who did not want cash transfers and will not receive it. All cash transfers will be made in the name of the woman of the family.
The pilot will study the consumption, expenditure, and nutrition of the four groups and compare them against each other to determine the impact of cash transfers, and will submit its findings to the government.
However, the pilot programme has faced serious opposition from NGOs opposed to cash transfers. Members of these groups distributed pamphlets in the slum warning that participating in the pilot would lead to ration shops shutting down, and disrupted public meetings held by SEWA in the area. The pilot continues. RS
by Karl Widerquist | Sep 14, 2011 | News
Although barely reported in the media, two basic income pilot projects are have been underway in India since January 2011. One pilot is being conducted in part of Delhi and the other in eight small rural villages in Madhya Pradesh. The Self Employed Women’s Association (SEWA) began planning and raising money for the rural project in 2008. The Delhi government eventually joined in, working with SEWA to organize an urban pilot project in Delhi.
Publicity about the project has been deliberately kept low because opponents have been using scare tactics to disrupt and to discourage participation in the project. They have spread rumors that the pilot would lead to the reduction or elimination of existing government support for the poor.
Families participating in the urban project receive 1000 Rupees per month (about US$22). Some participants have reduced access to other government transfers; some participants receive the grant all with full access to other government transfers. In the rural project, adult receive 200 Rupees a month (about US$4.40) and each child under the age of 14 receives 100 Rupees a month (about US$2.20). The project organizers will study the consumption, expenditure, and nutrition of the different groups of participations to a “control” group receiving no additional transfers to determine the impact of cash transfers.
These projects are similar to the Namibian basic income pilot project and to the U.S. and Canadian governments’ Negative Income Tax experiments conducted in the 1960s and 1970s, but the rural project adds an important new innovation to the method: the project is being conducted on the village, rather than on the individual, level. All residents of eight Indian villages will receive the basic income, and their behavior will be compared with residents of twelve “control” villages. This method will allow project designers to study village-wide effects of the transfer.
Guy Standing, professor of economic security at Bath University (UK) and an honorary co-president of the Basic Income Earth Network, helped to conceive and organize the project. He argues that it needs to be conducted with scientific dispassion. But he’s hopeful of the outcome. Asked about the results of the Namibian pilot project—which he was also a part of—Standing said that organizers documented many positive effects: “Child school attendance went up dramatically, use of medical clinics went up. Those with HIV/ AIDS started to take ARTs (Antiretroviral Therapy drugs) because they’d been able to buy the right sort of food with the cash. Women’s economic status improved, and the economic crime rate went down. Income distribution improved.”
For more about the projects see an interview with Guy Standing in The Times of India:
https://www.timescrest.com/opinion/social-insurance-is-not-for-the-indian-open-economy-of-21st-century-5775
