by Andrew Sisk | Feb 28, 2017 | News
Writing on thRead, the blog of Indian newspaper The Hindu, Prashant D.P. presents the idea that a Universal Basic Income (UBI) in India, while favored by Arvind Subramanian, India’s Chief Economic Adviser, could have unintended consequences if implemented.
D.P. reasons that India’s previously poor would use a UBI to buy much needed resources, like nutritious food. The resulting demand increases would cause brutal price inflation, he writes, unless the chronically inadequate supply of those needed resources can be increased first.
See the full article:
Prashant D.P., “UBI | Pockets to fill, mouths to feed” (February 3, 2017)
by Genevieve Shanahan | Feb 13, 2017 | News
The Economist has published a short article focused on the basic income chapter of India’s recent Economic Survey (covered in Basic Income News here).
The article expresses the opinion that the case for basic income is premature in rich countries (assuming automation and associated job loss is the main case for such a scheme in these states). However, it argues, the case is more compelling in India given its “thicket of welfare payments” that are plagued by inefficiencies and corruption:
“Giving people cash would be far better than today’s system of handing out welfare in kind. The plethora of schemes in place for Indians to claim subsidised food, fuel, gas, electricity and so on are inefficient and corrupt. Beneficiaries are at the mercy of venal officials who can lean on them to accept less than they are entitled to. Payments in kind rest on the paternalistic assumption that poor Indians are incapable of making rational spending decisions.”
While exploring potential issues to do with the political palatability of including wealthier people in the programme and ensuring the payments reach low-income rural areas with limited access to banking facilities, the article concludes: “as a way of helping the world’s poorest people, the case for a UBI is strong.”
The Economist, “Bonfire of the subsidies: India debates the case for a universal basic income”, The Economist, February 2, 2017.
Reviewed by Dawn Howard
Photo: People queue outside a bank, Salt Lake City, Kolkata. CC BY 3.0 Biswarup Ganguly
by Kate McFarland | Feb 4, 2017 | News
The Government of India has released its 2016-17 Economic Survey, with its eagerly awaited chapter on UBI. The discussion is largely favorable, declaring it time for “serious deliberation” about a UBI for India.
Each year, the Ministry of Finance of the Government of India releases a document called the Economic Survey, which reviews and analyzes developments in the nation’s economy. The Economic Survey is made publicly available (its official website promotes it to “policymakers, economists, policy analysts, business practitioners, government agencies, students, researchers, the media, and all those interested in the development in the Indian economy”), and is presented to the Indian Parliament during its budget session.
Arvind Subramanian CC BY-SA 2.0 PopTech
Last September, Chief Economic Adviser Arvind Subramanian announced that the 2016-17 Economic Survey would contain a chapter on universal basic income (UBI), making the document hotly anticipated among UBI supporters and others following the movement. (Sensationalized reporting led some early reports to claim, mistakenly, that India was about to launch UBI.)
The 2016-17 Economic Survey, with its 40-page chapter “Universal Basic Income: A Conversation With and Within the Mahatma,” was officially released on January 31, 2017.
Its discussion on UBI is framed around the question of whether Mahatma Gandhi would have endorsed UBI, a question that Subramanian anticipated in comments to an inter-faith prayer meeting last fall. (The main conclusion, presented on the first page, is that he would have been conflicted; a bit more is said in the final section, but I shan’t spoil the ending.)
The tone of the chapter is highly sympathetic to UBI, and the Ministry of Finance calls UBI a “powerful idea whose time even if not ripe for implementation is ripe for serious discussion.”
BIEN co-founder Guy Standing, who conducted basic income pilot studies in India earlier in the decade, was among those who provided input to Indian government for the survey. Standing states,
This is the first major government that has come out with an official favourable report on basic income, and has shown that it is feasible. It recognises the political obstacles and the challenges of rolling it out. We are delighted that the team writing the chapter in the Economic Report have drawn on our basic income pilots in Madhya Pradesh, which are still the biggest such pilots to have been conducted, as shown in our recent book.
In India, UBI has become popular largely as a potential solution to the misallocation, leakages, and corruption in the country’s extensive and complex system of targeted in-kind benefits to the poor. The Economic Survey describes these problems in presenting the argument for UBI in India. In addition, it considers the potential for UBI to promote individual agency. Paid to individuals instead of households, it could be particularly effective in empowering women.
The authors also cite empirical studies to assuage worries that UBI would discourage work or promote the consumption of temptation goods like tobacco, alcohol, and paan.
While the discussion of UBI is largely favorable, the authors acknowledge practical difficulties in implementing the scheme nationwide, including fiscal constraints and resistance to eliminating current programs (most of which, according to the survey, must be eliminated if UBI is to be financially feasible). Additionally, the survey notes that there may be popular resistance to full universality — especially the transferring of money those already well-off. To address the latter issue, it suggests abandoning true universality (“excluding the non-deserving” from receiving the benefit), and proposes several mechanisms to discourage the well-off from accepting UBI payments.
Due to these and other practical difficulties, the chapter favors the introduction of UBI in a gradual manner. It presents three possible starting points: (1) offer an unconditional basic income as an optional alternative to recipients of existing subsidies (with the caveat that this approach would not remedy problems in targeting the poor or allocating money to districts commensurate with need); (2) provide a “UBI for women”; (3) provide a basic income that is “universal” only within certain vulnerable populations, such as the elderly, widows, mothers, or those with disabilities or illnesses.
In all cases, the authors note, effective implementation of the scheme would be hampered by the fact that many poor citizens do not have bank accounts or ready access to banks. Thus, a prerequisite is the full implementation of the Jan Dhan, Aadhaar, Mobile (JAM) scheme, which would provide all Indians with a bank account and the ability to receive funds electronically, through a mobile phone.
Read the full chapter here.
Plus a Bonus in Chapter 13…
In addition to including a dedicated chapter on UBI, the Economic Survey broached the idea of a sovereign wealth fund and citizen’s dividend, a type of UBI, in a later chapter titled “The ‘Other Indias’: Two Analytical Narratives (Redistributive and Natural Resources) on States’ Development”.
Goan mines, CC BY 2.0 Abhisek Sarda
The chapter refers to the Goa Iron Ore Permanent Fund, which was created by a Supreme Court order in 2012. The state of Goa, which is rich in mineral deposits, has been plagued with corrupt and controversial mining practices. Under the 2012 court order, a portion of the money received from sales of iron ore must be placed into a permanent fund to preserve for future generations. The Goenchi Mati Movement, whose member Rahul Basu provided input to the Economic Survey, demands an expansion of the fund and the distribution of its revenue in equal cash payments to all Goans.
The Economic Survey states:
One way to increase citizens’ participation is via creation of a dedicated Fund to which all mining revenue must accrue. The assumption here is that minerals are part of the commons, owned by the state as trustee for the people – including future generations. Therefore, the revenue from the natural resources should be saved in a non-wasting asset – in a Permanent Fund. The real income accrued by the Fund can be redistributed to citizens affected by and having a stake in the extraction of the resource.
Basu remarked, “We are happy that the Government of India is also considering implementing the core principles of the Goenchi Mati Movement. We hope the people and the politicians of Goa also keep the use of our natural resources and land at the core of their voting choices for the assembly elections [on February 4, 2017].”
Reviewed by Genevieve Shanahan
by BIEN | Jan 30, 2017 | News
(Credit to: The Freepress Journal)
Anjit Ranade, senior economist based in Mumbai, writes in The Free Press Journal that a direct universal cash benefit “can replace ill-targeted subsidies on cooking gas, fertiliser and food grain,” under India’s current welfare system.
4.2% of India’s Gross Domestic Product (GDP) is spent on subsidies: electricity, fertilizer, food, oil, rail, and water. Many of the subsidies do not make their way to the purported beneficiaries because they are untargeted. Ranade reports, targeted subsidies can use the subsidies better.
Vijay Roshi, Reader in Economics at Oxford University, is an early supporter of UBI for India. With all considered, Roshi sees UBI as a possibility with 3.5% of India’s GDP. Ranada said, “UBI is based on a Gandhian principle: societal welfare is determined by how we treat our worst off.”
Read the full article here:
Ajit Ranade, “From NREGA to universal basic income“, The Free Press Journal, December 12th, 2016
by Kate McFarland | Jan 24, 2017 | News
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
