Ensure a minimum income for all -Ram Singh
A basic income scheme will deliver benefits to the poor only if it comes on top of public services
The idea of a universal basic income (UBI) is gaining ground globally. It has supporters among the political left and right, and among proponents as well as opponents of the free-market economy. A UBI requires the government to pay every citizen a fixed amount of money on a regular basis and without any conditionalities. Crucial to the appeal for such a demand — for a UBI — is that millions of people remain unemployed and are extremely poor, despite rapid economic growth in the last three decades. The National Democratic Alliance government has already unfolded a limited version of the UBI in the form of the Pradhanmantri Kisan Samman Nidhi Yojana (PM-KISAN) which promises ?6,000 per annum to farmers who own less than 2 hectares of land. Going by media reports, the election manifesto of the Congress Party may announce an even more ambitious version of the scheme.
Where it will work
The UBI is neither an antidote to the vagaries of market forces nor a substitute for basic public services, especially health and education. Besides, there is no need to transfer money to middle- and high-income earners as well as large landowners.
However, there is a strong case for direct income transfers to some groups: landless labourers, agricultural workers and marginal farmers who suffer from multi-dimensional poverty. These groups have not benefited from economic growth. They were and still are the poorest Indians. Various welfare schemes have also failed to bring them out of penury.
A case in point is the access to institutional credit issued by banks and cooperative societies. According to National Sample Survey Office (NSSO) data from the 70th round, institutional credits account for less than 15% of the total borrowing by landless agricultural workers; the figure for marginal and small farmers is only 30%. These groups have to borrow from moneylenders and adhatiyas at exorbitant interest rates ranging from 24 to 60%. As a result, they do not stand to benefit much from the interest rate subsidy for the agriculture sector. Likewise, the benefits of subsidised fertilizers and power are enjoyed largely by big farmers. In urban areas, contract workers and those in the informal sector face a similar problem. The rapid pace of automation of low-skill jobs and formalisation of the retail sector mean the prospects of these groups are even bleaker.
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