Universal Basic Income, new magic stick of Prime Minister Narendra Modi?

Prime Minsiter Narendra Modi. Photo: IANS

New Delhi, January 7: The government of India is proceeding towards a greater leap through a payment scheme which pay a basic income to the citizens. The Centre under the leadership of Prime Minsiter Narendra Modi, is now working on an idea of providing a “Universal Basic Income” or a regular payment to all its citizens irrespective of their employment or income. It is basically a practice of paying every citizen of the country, a fixed amount of money on a regular basis. This could be considered as a means to means to stimulate the economic growth and an greatly improve the quality of life.

Professor Guy Standing, an economist who co-founded the Europe-based advocacy group Basic Income Earth Network (BIEN), said that the scheme will be outlined in the Economic Survey, that would be presented in Parliament on 31 January 2017.

Three pilot projects, two in Madhya Pradesh and one in west Delhi are already implemented under the “Universal Basic Income” scheme. The pilot projects in Madhya Pradesh has been launched in 2010. Under this scheme they provided every man, woman, and child across eight villages with a modest basic income for 18 months. Professor Guy Standing said that welfare improved dramatically in the villages, “particularly in nutrition among the children, healthcare, sanitation, and school attendance and performance.” He added that the scheme also turned out some unexpected results.

“The most striking thing which we hadn’t actually anticipated is that the emancipatory effect was greater than the monetary effect. It enabled people to have a sense of control. They pooled some of the money to pay down their debts, they increased decisions on escaping from debt bondage. The women developed their own capacity to make their own decision about their own lives. The general tenor of all those communities has been remarkably positive,” he said.

“As a consequence of this, the Indian government is coming out with a big report in January. As you can imagine that makes me very excited. It will basically say this is the way forward.” The Economic Survey will be published on January 31.

What is Universal Basic Income?

UBI is a universal cash payment given periodically and unconditionally to each citizen of the country, without a means test or work requirement. So every citizen or resident of India would get a fixed basic income from the government irrespective of his or her income or employment status. The individuals will be free to use the money for whatever way they want.

The scheme has attracted the attention of various rich and poor countries. Where, Finland is considered as the first country to start paying basic income to its citizens, which commenced the scheme on January 3rd. The Finnish government has decided to give away 560 euros, every month to a group of citizens, over the next two years.

Under this experimental scheme, about 2,000 unemployed Finnish citizens between the ages of 25 and 58 will receive this amount every month, unconditionally and tax-free basic income. They are not required to report to any agency regarding how they spend this money. They would continue to receive this free income, even if they find a job.

Universal Basic Income in the Indian Scenario

In 2004-05 statistics, over 40 per cent of the households are dependents of agriculture and 32 per cent of households are dependents of other labours held BPL ration cards. There exists a list of ‘Below Poverty Line, which is notorious for excluding many people who struggle with poverty. Ironically, the BPL list included many non-poor and even filthy rich. The Public Distribution System which India follows, provides access for people living in poverty, to ration shops where they can buy basic goods such as food grains and kerosene at a lower price, when compared to the open market.

Five per cent of the agricultural labour households and four per cent of other labour households had Antyodaya cards. The process of transferring food worth a rupee, costs the government more than Rs. 4. The actual scene is that the PDS does not reach at least the majority of the people it is intended to benefit. A study by Planning Commission member Kirit Parikh in 1994 found that in Uttar Pradesh, Bihar, Orissa and Madhya Pradesh, more than 90 per cent of the population does not buy any cereals from the PDS.

According to Wikipedia, in 2012, the Indian government stated that 22% of its population is below its official poverty limit. Where this Public Distribution system fails in India, this “Universal Basic Income” could at least reduce the number of poverty deaths occurring in India.