Universal Basic Income & Economic Survey 2017-18

  • The Economic Survey 2016-17 tabled in Parliament today by the Union Finance Minister Shri Arun Jaitley has advocated the concept of Universal Basic Income (UBI).
  • This is as an alternative to the various social welfare schemes in an effort to reduce poverty.
  • The survey juxtaposes the benefits and costs of the UBI scheme.
  • The Survey says the UBI, based on the principles of universality, unconditionality and agency, is a conceptually appealing idea.
  • Economic Survey points out that the districts where the needs are greatest are precisely the ones where State capacity is the weakest.
  • This suggests that a more efficient way to help the poor would be to provide them resources directly, through a UBI.

    Exploring the principles and prerequisites for successful implementation of UBI, the Survey points out that the two prerequisites for a successful UBI are:

    a. functional JAM (Jan Dhan, Aadhar and Mobile) system as it ensures that the cash transfer goes directly into the account of a beneficiary

    b. Centre-State negotiations on cost sharing for the programme.

    The Survey says that a UBI that reduces poverty to 0.5 percent would cost between 4-5 percent of GDP.

    This is assuming that those in the top 25 percent income bracket do not participate.

    On the other hand, the existing middle class subsidies and food, petroleum and fertilizer subsidies cost about 3 percent of GDP.

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