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Economic Survey bats for Universal Basic Income, but says time not ripe for implementation


Invoking Mahatma Gandhi’s vision of “wiping every tear from every eye”, the Economic Survey today made a strong pitch for implementing Universal Basic Income (UBI) that stipulates a certain income for the poor.

“UBI is a powerful idea whose time, even if not ripe for implementation, is ripe for serious discussion,” said the Economic Survey for 2016-17, which was tabled in Parliament by Finance Minister Arun Jaitley.

Stating that the Mahatma would have anxiety about UBI as being just another add-on government programme, but on balance may have given the go-ahead, the Survey pointed out that the two pre-requisites for its success are functional JAM (Jan Dhan, Aadhar and Mobile) and Centre-state negotiations on cost sharing for the programme.

The Survey estimated that a UBI that reduces poverty to 0.5 per cent would cost 4-5 per cent of GDP, assuming that those in the top 25 per cent income bracket are not part of the loop.

“On the other hand, the existing middle class subsidies and food, petroleum and fertilizer subsidies cost about 3 per cent of GDP,” it said.

Noting that despite making remarkable progress in bringing down poverty from about 70 per cent at Independence to about 22 per cent in 2011-12 (the Tendulkar committee), the pre-Budget document stressed that “wiping every tear from every eye” is about a lot more than being able to imbibe a few calories.

“And the Mahatma understood that better, deeper, and earlier than all the Marxists, market messiahs, materialists and behaviouralists,” the Survey said, in unequivocal terms, in a chapter titled ‘Universal Basic Income: A Conversation With and Within the Mahatma’.

It has been necessitated in India, according to the Survey, all the more because there is weakness in existing welfare schemes that are plagued by misallocation, leakages and exclusion of the poor.

The central government alone runs close to 950 central and centrally-sponsored sub-schemes, which cost about 5 per cent of GDP, the pre-Budget document said, adding that “clearly there is rationale for many of them, but there may be intrinsic limitations in terms of the effectiveness of targeting”. MORE

(This article has not been edited by DNA’s editorial team and is auto-generated from an agency feed.)