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Do you suggest a programme of Universal Basic Income (UBI) to reduce extreme poverty in India ?

According to Economic Survey a UBI could cost 4-5% of GDP. A UBI will ideally have the following characteristics:

Universal–Available to everyone–not means tested

Basic–Sufficient money for basic needs

Income–Cash transfer on a regular basis (not one-time)

Pros

Poverty still high at 22% in 2011-12; need new approach to reduce it

-Present welfare schemes ridden with corruptiono46.7% grain diverted under PDS (Gulati and Saini, 2015)

   o Malpractices in MGNREGS

-Missing out eligible beneficiaries a major concern with current anti-poverty programmes

   o E.g. 8 crore have no ration card

-DBT and JAM made efficient transfers possible

-If all subsidies are phased out, fiscal room of 4%of GDP can be made available

-Moral imperative to reduce poverty beyond 22% in a $3 trillion economy

Cons

-Fiscally unsustainable

   o If subsidies are not phased out, amount may increase with political cycle

-Even the rich get a UBI transfer

   o Wastage of fiscal resources

-Might reduce labour supply and job hunt

   o Although Banerjee et al. found no effects in an RCT

-Amount that is transferred may be spent on sin goods

   o Unequal distribution within family (women, girls)

-Multidimensional poverty will not decrease just by cash transfer

   o 377 million MPI poor (2018); need other assets like housing, sanitation too that are not supplied by private market.

More debate and analysis is needed on UBI. Its fiscal cost must be contained by reducing other subsidies and pilots must be conducted at the state level to test impact on poverty.







POSTED ON 09-06-2022 BY ADMIN
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