By Prof. R.K.Panda* in Bhubaneswar, July 15, 2023: A recent statement (the Indian Express, dated 16th June 2023) by V. Anantha Nageswaran, the present Chief Economic Advisor ( CEA), Government of India ruling out Universal Basic Income ( UBI) scheme for India has aroused fresh debate on the issue.

The above statement is in contrary to the idea of Arvind Subramanian, former CEA, Government of India who explored the possibility of introducing UBI as a policy tool in the country and to that extent drafted a separate sub-chapter in the Economic Survey, 2016-17. While the political expediency behind experimenting with UBI was to tackle agrarian distress during that period, the under-performance of anti-poverty programmes along with inefficient and distortionary subsidies operating for years paved the economic argument for implementing UBI in the country.

There is a good old saying that economists differ. As such there is nothing unusual between the present CEA and former CEA in approaching UBI as a policy tool differently. However, what is of interest to say that there has not been significant transformation in the economic scenario that exists today from that was in 2016-17 when the proposal for introducing UBI or quasi-URBI was thought of.

No doubt the Indian economy has recovered a great deal in GDP growth rate in the post-pandemic period yet its current growth rate has remained below that was achieved on the eve of pandemic. Scepticism continues to prevail in the investment market. As such the opinion of present CEA stating UBI unnecessary as a policy option in near-term seems too much simplistic.

Needless to say, UBI may be taken as a radical paradigm shift in thinking to have a just society by providing a guarantee to each citizen a minimum income to live on with dignity. It is termed as a right which is unconditional, universal for every citizen. It treats an individual as agent and not a subject. Contrary to the current welfare system which inflicts indignity upon the poor by assuming that they cannot take economic decisions relevant to their living, the UBI liberates citizens from paternalistic- clientelistic relationship with the state.

As stated by the current CEO, no doubt economic growth plays a determinate role in improving the living standard of the people, yet economic growth alone can not do the needful unless the benefits of growth is shared among large masses and particularly by the poor and vulnerable through creating higher employment opportunities.

Poverty in India is largely a product of lack of employment opportunities. As per the available information there has been a fall in new employment in the country’s organized sector over the past decade. Besides, slowing down of overall job creation in the country in recent years has become a cause for concern. All these call for a large-scale expansion of social safety nets in the country.

Against the implementation UBI some argue that it will dis-incentivise people to work. Some others opine that UBI will promote conspicuous consumption. However, two pilot studies on impact assessment of UBI have been conducted in Delhi and Madhya Pradesh .

The findings from these studies have neither shown any discouraging impact on the people towards work nor rise in consumption of temptation goods among beneficiary households. Instead the findings have revealed improvements in the life and living of the households who received the cash transfer benefits under UBI during 2010-11.

In this regard Pranab Bardhan ( 2011) writes that UBI is one of the cleanest and least incentive-disruptive ideas for enhancing social welfare protection in India. Studying the case of India, Guy Standing and Pranab Bardhan ( 2011) have expressed strong support to its implementation as an alternative to existing social programmes. Writing on this, C. Rangarajan and S. Mahendra Dev ( 2020)has also argued for providing minimum income support to the weak and vulnerable in the society.

Often it is argued that UBI implementation will entail huge fiscal burden on the country. Studies of Pranab Bardhan and others have belied this contention. They are of the opinion that counting on the leakages and administrative costs involved in the existing social protection programmes the UBI will certainly a better choice. The Economic Survey 2016-17 estimated cost of such scheme at 4.9 percent of GDP.

India’s interest on UBI has emerged from frequent debates on whether cash transfers deliver benefits and alleviate poverty more efficiently than in-kind transfer programmes. In recent years rapid expansion of direct cash transfers linked to national biometric data base has been operating successfully. Under the circumstances, UBI as a social safety net seems better choice over the existing programmes. Given the scarce resources a targeted approach on UBI can be tried. To adopt UBI a political will is needed.

*Former Professor of Economics, Utkal University & Director, Nabakrushna Choudhry Centre for Development Studies (ICSSR Institute) , Odisha, Bhubaneswar.

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