Myths: Universal Basic Income

India is one of the fastest-growing countries in the world with an average annual growth rate of more than 5% for the last decade. However, the growth cannot be called as an inclusive one. The unemployment rate is at its highest since Independence. A policy shift is required in these circumstances.

Universal Basic Income is one policy that is doing the rounds in Indian politics ever since the 2019 Loksabha elections. Some people say that this policy is not feasible and some say the outcomes are minuscule. The questions that arise from this policy can be categorised into three domains. One: Financial feasibility, Two: Transparency, and Three: Outcomes.

Financial feasibility
The policy is financially feasible only when it is a centrally sponsored scheme. Implementation of this policy requires subsuming the existing central schemes which contribute to 30–35% of the total grants. A major chunk of this scheme(65–70%) requires subsumption of the existing welfare schemes and some additional grants from the respective states.

The subsumption of central schemes includes scraping of the existing public distribution system. The annual food subsidy bill that the Government of India is incurring is Rs. 1,71,127.5 crores. This amount when disbursed to 83 crore beneficiaries, will give an annual per capita grant of Rs.2063.

The states contribute a major chunk of the grants by subsumption of various schemes. Andhra Pradesh spends about Rs. 13,015 crores on Food subsidy, Kalyana Kanukas, caste specific welfare disbursements and it’s volunteer system. This amount when subsumed provides a per capita grant of Rs. 3718 rupees each for 3.5 crore beneficiaries in the State. Similarly, Telangana spends about Rs. 10,732 crores on Food subsidy, Kalyana Lakshmi scheme, Shaadi Mubarak scheme, and debt waivers. This amount when subsumed provides a per capita grant of 4,578 rupees each for 2.3 crore beneficiaries in the State.

A 30–35% grant from the Union and 65–70% grant from the State will ensure ~Rs. 25,000 per household annually. As per Consumption Expenditure Survey, 2011, the annual household consumption expenditure stands at ~Rs.63,000 which includes food, housing, clothing, education, footwear, medicines, electricity, fuel, etc., Considering this, approximately 40% of the social security needs are taken care of by the government by providing Universal Basic Income, without any additional financial burden.

Transparency
Currently, there are 419 schemes of the Union government which use Direct Benefit Transfer. This will help in the removal of duplicate/fake beneficiaries and also reduce rampant corruption in what is called the most corrupt department, the civil supplies department. The state of West Bengal has recently cracked down 300 Fair Price Shop dealers for alleged corruption and misappropriation and amid the COVID-19 pandemic. Direct Benefit Transfer will reduce the inefficiencies in the system and remove the corrupt practices and misappropriations.

Outcomes
Financial feasibility and transparency are possible undoubtedly. However, the outcomes to the general public have to be looked at very carefully. One of the positive aspects of this policy is that it brings poor households close to the market and enables them to spend money rationally.

Currently, the lower middle class and poor are stuck in a trap, where the food is distributed to them at a very minimal price and they have been distanced from the market. The government decides on the individual’s behalf on what he/she needs to eat. The governments have perpetually punished the poor masses for decades. This policy will just bring a shift in the way social security is looked at by the State.

However, this policy doesn’t guarantee employment, quality education, or health. The problems such as growing inequalities and the unemployment rate will still exist in the country. The buzz around Universal Basic Income is too shallow for the problems being faced by this nation. Unless quality education, health, infrastructure, and employment opportunities are available, any form of social security measure will do not good.

Jai Hind!