Universal Basic Infrastructure to help decrease India’s poverty – Economic Times

With over 200 million people still below the poverty line and a similar number earning barely enough, much needs to be done to improve their lives. While faster growth is an obvious antidote, the view that some sort of universal basic income (UBI) may be needed to provide immediate relief is gaining currency. The UBI must be embraced in a deliberate, phased manner as it allows reform to occur incrementally weighing the costs and benefits at every step, the Economic Survey of FY17 had said.

The idea of universal income support has been under discussion for several years but the first real push was given by chief economic adviser Arvind Subramanian in the Survey. While UBI could be more of an imperative in developed countries where manufacturing and services are moving to the developing world, India has tremendous scope for improving job creation along with strengthening its social infrastructure that in turn could lift millions out of poverty. As a result, the idea, which has seen some global success, is yet to take root in India.

According to the Survey, identified beneficiaries can be given a choice of UBI instead of subsidies under existing programmes. Based on FY12 level of distribution and consumption, the Survey estimated the income needed to take one person out of poverty at Rs 7,620 per year.

The Survey said UBI that reduces poverty to 0.5% of population would cost 4-5% of GDP, assuming that those in top 25% income bracket do not participate. The existing middleclass, food, petroleum and fertiliser sops cost about 3% of GDP. While DK Pant, chief economist of India Ratings, is in sync with the proposal to replace other subsidies with UBI, he is apprehensive of how best can beneficiaries be identified.

Unless you identify beneficiaries, the government will not be able to assess cost implications. The next challenge will be to monitor the progress. However, ensuring that all citizens have the right to a minimum income as a long-term solution to reduce poverty seems to be a distant dream with not many in the government and academia believing the option is viable.

Even if you take 2011-12 urban poverty line as Rs 1,000 in nominal terms, per person it translates into Rs 15 trillion for a population of 1.25 billion whereas the Central budget is somewhere (in the region of) Rs 21 trillion.

Hence, it is not fiscally feasible, outgoing Niti Aayog vice-chairman Arvind Panagariya said. He said the socioeconomic and caste census available can help identify beneficiaries while the National Rural Employment Guarantee scheme enables self-identification. Most experts believe that before supplementing the income of countrys over 200 million poor, India should put in place basic infrastructure for health, education, sanitation and drinking water to ensure a basic standard of living.

India still has a huge deficit on the social infrastructure side and unless we ramp up... there is no point in giving a little extra income,said another senior government official requesting not to be identified. The official said UBI has become imperative in developed countries to ensure a peaceful society or their youth will become disruptive in the wake of jobs migrating overseas.

UBI is not a bad idea but does the country have that much money? ...it is essential that government significantly increase its expenditure on creation of social infrastructure which will help to bring poor people into the mainstream, said Himanshu, assistant professor of economics at JNU.

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Universal Basic Infrastructure to help decrease India's poverty - Economic Times

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