The case for minimum basic income (UBI in India)

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 The case for minimum basic income (UBI in India)

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• An income support scheme : There will be pressure on the govt. to respond to the programme offering minimum basic income promise of Rahul Gandhi (if elected to power).
• Some facts on minimum income schemes : A lot of criticism is unfounded, as the pilot project from 2010 to 2013 in MP and Delhi (covering 6000 beneficiaries) showed. There were some positive outcomes –

1. At high levels of impoverishment, the little support given made a big impact in nutrient intake, school enrolment and female attendance, and reduced indebtedness.
2. Consumption of foodgrains went up (pulses 1000%, vegetables 888%, meat 600%).
3. Alcohol buying was not the destructive factor, as feared!

• Why give income support? Sadly, the LPG reforms of India since 1991 have not helped agriculture sector much, and poor rural Indians are where they were (largely). National income figures have grown, but not all sectors gained equally. Rich or middle-class Indians gained more.
• What do we need really? Overall, we need a much superior economic growth model. But till that time, we need a redistributive policy intervention (like income transfer) to improve on equality.
• What these are not? Such income transfers are not unemployment allowances - these are unconditional support mechanisms. So, an acceptance that we help you as policies have failed. The West is now working towards UBI - Universal Basic Income. Why? Fight slow wage growth, remove fear of immigrants, etc.
• Equity, and Rural distress : Minimum income will surely address equity concerns, but also directly combat rural distress created by many policy failures - bad procurements, wrong trade and pricing policies (bumper harvests = disaster!), etc.
• Telangana income support : Telangana's Rythu Bandhu offers Rs.10,000 /ha, but benefits only landowners not others (tenants, sharecroppers, landless labourers). Reliable land records are a must. (Positive - no moral hazard of loan waivers)
• Odhisha's KALIA scheme : It transfers Rs.5000 in cash per person (Rs.10,000 per person per year for double cropped land) to 30 lakh marginal farmers, and leaves out 2 lakh large farmers. Rs.12,500 is to be given to 10 lakh landless households. Hope? They will rear goats, poultry, or grow mushrooms, honey etc. (Positive - no moral hazard of loan waivers)
• Why not BBY? The Bhavantar Bhugtan Yojana (Price Deficiency Payments Scheme) that pays the gap between depressed prices and MSPs is problematic, as it gives wrong pricing signals to farmers and affects cropping patterns.
• Urban poor covered : Minimum income will cover urban poor. It is better than MGNREGA as that locks manpower in low-productivity work. Here, there's no "locking".
• SECC and DBT : Beneficiaries can be found through the 2011 SECC, and incomes transfer can be done via Jan Dhan or post office.
• Higher fiscal deficit : That always sparks higher inflation, ultimately hurting the poor. So we cannot have a higher F/D to fund income support. But there is enough space to rationalise useless or wrongly given subsidies annually, to free resources for this new idea.
• Wealth tax : It was abolished in 2015, but can be brought back for the super-rich.
• Summary : The minimum income guarantee plan is workable, and will prove very useful in eliminating rural distress.

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