The idea of Universal Basic Income (UBI), flagged by the Economic Survey 2016-17, again hit the headlines following a statement given by Sikkim Chief Minister Pawan Kumar. The Sikkim Democratic Party (SDP) has proposed a basic income by 2022, if re-elected to power. The north-eastern State could then become the first in the country to achieve the milestone of implementing UBI.

UBI is a periodic cash payment unconditionally delivered to all on an individual basis, and the spending of the same can be freely decided upon by the respective individuals. This system works to eliminate mis-allocation, exclusion and leakages.

The 2017 Survey had flagged the UBI scheme as a conceptually appealing idea and a possible alternative to social welfare programmes targeted at reducing poverty. UBI envisages a social safety net that seeks to assure a dignified life for everyone, a concept that is expected to gain traction in a global economy buffeted by uncertainties on account of globalisation, technological change and automation.

The man behind the scheme, former CEA Arvind Subramanian, proposed that this innovation can be rolled out in stages. He proposed scrapping of almost 940 welfare schemes to find the money for the same, which may roughly worked out to 4.9 per cent of GDP. The UBI needed to take one person out of poverty is ₹7,620 per year.

Sikkim plans to subsume other subsidies and allowances in order to go ahead with its proposal. It has set many examples in socio-economic development, such as being the best State for working women, the first to go fully organic, the highest surplus power generation capacity, 98 per cent literacy and 8 per cent poverty. Few other States like Madhya Pradesh, Gujarat, and Maharashtra have initiated UBI on a pilot basis.

In Madhya Pradesh, for instance, it was implemented in eight villages, out of a total sample of 20 villages selected with the support of of Self-Employed Women’s Association (SEWA).

The study yielded positive results in terms of reduced hunger, malnutrition and illness among recipients, and improvement in school attendance. This experiment was appreciated by the World Economic Forum, even though it does not subscribe to the idea of basic income. The WEF saw it as a positive step towards inclusive and sustainable growth. Also noteworthy is the fact that there was no conspicuous consumption or spending on social evils by the villagers, dispelling, thereby, a popular criticism of the scheme.

The Congress party is proposing the minimum income guarantee scheme instead of UBI, which should start from the poorest family. Former finance minister P Chidambaram seemed confident of raising the required funds for the scheme through budgetary sources.

The Centre, however, is determined to go ahead with UBI, and signalled its intent in the latest Budget by introducing the benefit transfer to farmers. A functional JAM (Jan Dhan-Aadhaar-Mobile) network as well as State negotiation on cost sharing needs to be established.

In Finland, UBI was implemented on a sample of 2000 unemployed youth in 2017. But their model cannot be replicated as India’s per capita income is low.

Indeed, UBI cannot act as a panacea. It needs to be supplemented by other initiatives. For the full implementation of UBI, a robust financial system is a must.

The writer teaches at Bhavans Palkhivala Academy of Legal Studies, Kozhikode

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