This document discusses Universal Basic Income (UBI) in India. It defines UBI as an unconditional monthly cash payment to all citizens to cover basic needs. The 2016-17 Economic Survey by the Indian government analyzed implementing UBI in India at 7,620 rupees per person annually, replacing many existing social programs and costing 4.9% of GDP. Economists like Aravind Subramanian and Pranab Bardhan support UBI as more efficient than current leaky targeted programs, while Vijay Joshi estimates it could be funded by ending subsidies. A referendum in Switzerland to provide a UBI was rejected by 77% over concerns it could reduce work incentives. Arguments for and against UBI in

1. UNIVERSAL BASIC INCOME
IN INDIA
BOON OR BANE ?

2. WHAT IS UNIVERSAL BASIC INCOME?
 Universal Basic Income – a monthly allowance of money enough to pay for
your basic needs: food, shelter, education.
 It is completely unconditional. Not as a favour, but as a right.
 UBI gives concrete expression to the idea that we have a right to a minimum
income, merely by virtue of being citizens.
 A wide variety of Basic Income proposals are circulating today.
 They differ along many dimensions, including in the amounts of the Basic
Income, the source of funding, the nature and size of reductions in other
transfers that might accompany it, and so on.

3. THE FIVE CHARECTERISTICS OF BASIC
INCOME
 Periodic: it is paid at regular intervals (for example, every month), not as a one-
off grant.
 Cash payment: it is paid in an appropriate medium of exchange, allowing those who
receive it to decide what they spend it on. It is not, therefore, paid either in kind (such
as food or services) or in vouchers dedicated to a specific use.
 Individual: it is paid on an individual basis—and not, for instance, to households.
 Universal: it is paid to all, without any test.
 Unconditional: it is paid without a requirement to work or to demonstrate willingness-
to-work.

4. What Aravind Subramanian Says
 The 2016-17 Economic Survey, with its 40-page chapter “Universal Basic Income: A Conversation
With and Within the Mahatma,” made a case for UBI in India.
 CEA, Aravind Subramanian has calculated the UBI for 2016-17 to be ₹ 7,620 ,based on the
calculations from the base year 2011-12.
 The Calculation depends on a number of objectives and assumptions.
 The survey assumes that in practice any program cannot strive for strict universality, so a target
quasi-universality rate of 75 per cent is set (this is later referred to as de facto UBI)," he says.
 He also calculated the economy-wide cost of the UBI—4.9 per cent of GDP.
Source : Economic Survey 2016-17
http://indiabudget.nic.in/es2016-
17/echap09.pdf

5.  Subramaniam and team, through the
ES, say that UBI would only roll out
as other social programmes would
be rolled back.
 So, in reality, a move to UBI might
actually be cheaper – per unit of
poverty reduction – than current
social programmes.
 The idea is that current ‘targeted’
programmes are so leaky and
misallocated that they’re not
targeted at all, and a well-run UBI
would be better than the status quo.
 By leveraging India´s combination of
an advanced electronic payments
infrastructure and
the Aadhaar biometric identification
programme with over 1.1 billion
enlistees, UBI could allow the Indian
central government to tackle poverty
directly, cutting out layers of
bureaucracy and political
intermediaries who siphon off
budgets or allocate programmes to
their cronies and favoured
constituents.
Centrally Sponsored and Central Sector Sub-schemes by Budget
Allocation, 5.2% of GDP (2016-17)
Source: Budget 2016-17

6. What Pranab Bardhan Says
 According to him, In many current programmes targeting the poor, through a process of political
and administrative collusion and connivance, benefits continue to leak to non-targeted, better-off
people.
 For e.g. - The India Human Development Survey of 2011-12 shows that about half of the Indian
poor do not have the BPL card and about one-third of the non-poor have it. In a country where
the large majority of workers are in the informal sector—often self-employed, without benefits
and without formal account-keeping and hence beyond means-testing—and with an
administration as corrupt and inept as ours, targeted programmes will remain leaky and
inefficient.
 A UBI can cut through much of this mess, and with Aadhaar and Jan Dhan bank accounts soon to
reach the overwhelming majority of people, a phased UBI over the next 10 years is
administratively feasible.

7.  Estimates of economists associated with the National Institute of Public Finance and Policy have
suggested that the total amount of government (Central plus states) subsidies that now accrue to
the better-off sections come to about 9% of GDP.
 There is a category of “revenues foregone” in the Central budget (mostly in the form of tax holidays
and exemptions), largely for firms or companies. This comes to about 6% of GDP.
 He decides to fix the UBI at an inflation-indexed Rs10,000 at 2014-15 prices. This comes to about
10% of the Indian GDP that year.
 So, according to him, a UBI of Rs10,000, funded by regressive subsidies and a fraction of revenue
foregone in the Central budget, and with no fresh taxes, is fiscally not impossible to manage.
Source : Pranab Bardhan on livemint
http://www.livemint.com/Opinion/WuLby
dPMOPxvWNrv

9. What Vijay Joshi Says
 Vijay Joshi, economist at Oxford University, advocates shifting to a universal basic income,
replacing all government subsidies with a single cash transfer to all citizens, providing them with
a basic income guarantee.
 Joshi said income distribution was largely done through price subsidies. This policy involves
providing products and services such as electricity and fertilisers at below-market prices. But this
system, as economists have also pointed out, is a rather inefficient way of helping the poor as
much of the benefits end up in the hands of the undeserving.

10.  He said that getting rid of these subsidies would lead to immense fiscal savings. Also the
revenue from privatisation, and the fiscal gains for the government could well be 10 per
cent of GDP.
 Joshi estimated that such a scheme would cost around 3.5 per cent of the GDP
Source : Book “India's Long Road: The
Search for Prosperity” by Vijay Joshi

11. What Happened In Switzerland
 Switzerland voted on a referendum to provide a basic income to all Swiss citizens, becoming the
first country to contemplate the implementation of UBI.
 Results from the referendum showed that nearly 77% opposed the plan, with only 23% backing
it.
 The supporters camp had suggested a monthly income of 2,500 Swiss francs ($2,555) for adults
and also SFr 625 for each child.
 The amounts reflected the high cost of living in Switzerland. It is not clear how the plan would
have affected people on higher salaries.

12.  The supporters had argued that since work was increasingly automated, fewer jobs were
available for workers.
 On the other hand, critics of the measure said that disconnecting the link between work
done and money earned would have been bad for society.
 The campaign group Basic Income Switzerland, argued before the vote that it would not
be money for nothing as "In Switzerland over 50% of total work that is done is unpaid.
It's care work, it's at home, it's in different communities, so that work would be more
valued with a basic income."
Source : BBC
http://www.bbc.com/news/world-
europe-36454060

13. Arguments In Favour
 Poverty and vulnerability will be reduced in one fell swoop.
 Better targeting of poor : As all individuals are targeted, exclusion error (poor being left out) is
zero though inclusion error (rich gaining access to the scheme) is 60 percent.
 Improvement in financial inclusion : Transfers will encourage greater usage of bank accounts
 Psychological benefits : A guaranteed income will reduce the pressures of finding a basic living
on a daily basis.

14. Arguments Against
 Conspicuous spending : Households, especially male members, may spend this additional
income on wasteful activities.
 Moral hazard : A minimum guaranteed income might make people lazy and opt out of the
labour market.
 Implementation : Given the current status of financial access among the poor, a UBI may put too
much stress on the banking system.
 Gender disparity induced by cash : Gender norms may regulate the sharing of UBI within a
household – men are likely to exercise control over spending of the UBI.

15. Challenges And Limitations
 UBI has not been implemented anywhere in the world, so all the
arguments, against and in favour, and all the figures presented for UBI
are hypothetical.
 Almost No data was available for analysis.

16. THANK YOU