Dinesh Kamath's Editorial 'UBI is a great idea' that was published in Newsband

UBI is a great idea

There should be a basic income scheme. The idea of a universal basic income (UBI) is great. 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.

Millions of people remain unemployed and are extremely poor, despite rapid economic growth. 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.

In urban areas, contract workers and those in the informal sector face a similar problem.

Several studies have shown that at high levels of impoverishment, even a small income supplement can improve nutrient intake, and increase enrolment and school attendance for students coming from poor households. This in turn would lead to a more productive workforce. It seems to be a good idea to transfer the money into the bank accounts.

Such a scheme will have three immediate benefits. One, it will help bring a large number of households out of the poverty trap or prevent them from falling into it in the event of exigencies such as illness. Two, it will reduce income inequalities. Three, since the poor spend most of their income, a boost in their income will increase demand and promote economic activities in rural areas. Nonetheless, an income transfer scheme cannot be a substitute for universal basic services.

The Socio-Economic and Caste Census (SECC) 2011 can be used to identify the neediest. Groups suffering from multidimensional poverty such as the destitute, the shelter-less, manual scavengers, tribal groups, and former bonded labourers are automatically included. The dataset includes more than six crore landless labourers. It also includes many small farmers who face deprivation criteria such as families without any bread-earning adult member, and those without a pucca house.

As an approximation, the number of eligible households is 10 crore. That is, even in its basic form, the scheme will require approximately ₹1.5 lakh crore per annum.

States such as Telangana and Odisha are already providing direct income support to their farmers. These States can extend their schemes to include the ‘non-farmer poor’. The other States too should join in.

The income transfer scheme is costly. However, the cost of persistent poverty is much higher.

Now Delhiites’ per capita income is thrice the national average. According to the Economic Survey of Delhi 2018-2019, Delhiites earn about three times the national per capita income. In 2018-2019, Delhi’s estimated per capita income at current prices is ₹3,65,529, while the national per capita income is ₹1,25,397.

According to the Economic Survey, the Delhi government’s “debt problem is well under control” That proves that Delhi is the most favoured state.