Universal Basic Income in India – the Policies that are Shaping the Debate

This election year, politicians across India are discussing Universal Basic Income (UBI) as an alternative to traditional subsidies and social welfare programs.

UBI is a policy that provides a periodic payment for beneficiaries regardless of social standing or employment status. Its goal is to eradicate poverty, encourage consumer demand, and redress inequality.

However, in India, the UBI discussion is being applied more widely, and specifically to rural poverty and farmers’ distress. Here, we describe some of the initiatives that have been discussed during the policy debate.

Madhya Pradesh cash transfer pilot

In 2012, the Self Employed Women’s Association (SEWA), Madhya Pradesh (MP) state government, and UNICEF conducted a MP Unconditional Cash Transfers (MPUCT) pilot, which provided a basic income for six thousand people in eight villages.

The pilot found beneficiaries saved more money and used the money to improve their standard of living at higher rates than control groups that recieved normal state subsidies.

UBI and the Economic Survey 2016-17

Find Business Support

Business Intelligence Services

In February 2017, then Chief Economic Advisor of India Arvind Subramaniam published the Economic Survey 2016-17, which contained a chapter explaining the benefits of UBI for India.

The survey advocated further debate on UBI as a scheme to limit poverty and streamline federal and state social benefits. This paper, which was partly based on the MP pilot, suggested an investment equal to 4.9 percent of GDP would make UBI feasible.

The Rythu Bandhu scheme in Telangana

In May 2018, the Telangana state government launched the Rythu Bandhan financial support scheme. The scheme provides eight thousand per acre annually to farmers; the scheme will cost the state government INR 12,000 crore (US$1.7 billion) per year.

Sikkim – the first state to announce a UBI plan

In January 2019, Chief Minister of Sikkim Pawan Kumar Chamling announced that his party, which is part of the ruling National Democratic Alliance, would roll out a UBI policy within three years, if voted back to power this year.

The chief minister announced that the policy would streamline existing social benefits and subsidies to support UBI. The state government plan, if enacted, would be financed by the states’ lucrative hydropower projects, and could represent the first and only UBI policy in India.

Congress 2019 election campaign

In January 2019, opposition Congress party president Rahul Gandhi announced basic income for the poor would feature as a policy goal in his election campaign.

The announcement said that the policy would provide INR 72,000 (US$1,042) per year to the poorest 20 percent of the country. Neither Gandhi nor the Congress party provided any financial or implementation details for the policy, which the critics slight as basic income only.

The government’s PM-Kisan scheme

In February, Prime Minister Narendra Modi’s government announced the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) income support scheme in its 2019 interim budget.

The interim budget said that the scheme would provide INR 6,000 (US$87) annually – in three installments – to farmers of small land holdings.

The scheme will cost the exchequer INR 75,000 crores (US$10.5 billion) in FY 2019-20 and INR 20,000 crores (US$2.8 billion) in FY 2018-19 and will be implemented with retrospective effect from December 2018, which is a first in the history of Union Budgets.

Farmers, interviewed by the media across the country, are unimpressed by the quantum of INR 6,000 (US$84) per annum

KALIA scheme in Odisha

In January 2018, the Odisha state government launched the Krushak Assistance for Livelihood and Income Augmentation (KALIA) scheme for farmers and landless cultivators.

The scheme will provide INR 5,000 (US$72) per season for marginal farmers, INR 10,000 (US$145)  per year for vulnerable households, and INR 12,500 (US$181) for landless families. The scheme will cost INR 10,180 crore (US$1.5 billion) for three years.

• Previous Article Investing in India? Look Beyond Modi’s Economic Policies
• Next Article FDI in India: Performance and Overview in FY 2019