In our pilot, the UBI served as a complement to existing welfare schemes. In fact, in most of our pilot villages, families that received the basic income used the money to buy food grains and stock them, given the uncertainty around their supply at the PDS. In other words, the PDS was still an important source of food security for villagers. They valued it, but couldn’t rely on it given the irregular nature and quality of its supply.
One option to get around this challenge is to offer people a policy of choice. This as the Economic Survey rightly suggests would give people a sense of agency. In our pilots, we found families buying eggs, pulses, fruits and vegetables over and above the rice and sugar that the local PDS dealer supplied to them.
There was a marked shift in the nutritional status of children as a result of these choices. However, a policy of choice would also mean a reaffirmation of the current system with its incumbent problems of poor targeting, leakages and misallocation. As the Economic Survey points out: “those well-off who are currently (wrongly) included will continue to have the right to be included”.
This problem can be countered, to an extent, by encouraging people to surrender the subsidy, just as the government did in the case of cooking gas. But at some stage, the state would have to consider a phased removal of food subsidy, if it has to realistically provide an inflation indexed UBI.
Yet another possibility – and might I add a more politically realistic one – is that the government rolls out a semi-targeted scheme i.e. give basic income to only those who deserve it. This can be achieved by applying principles of strict exclusion (e.g. excluding those owning land, consumer goods and so on) and principles of strict inclusion (including households without shelter, those living on alms, manual scavengers, primitive tribal groups etc.). The 2011 Socio Economic Caste Census offers detailed data on which families should be dropped and which ones included if such parameters are to be considered. That leaves the question on whether these parameters should be considered sacrosanct.
After all, households keep falling into and moving out of poverty. Those who own land may have to sell it in the event of a major illness in the family. If UBI is to provide a sense of social security as the government intends it to, it must focus on improving the country’s health infrastructure, the ‘poor health’ of which is a major reason for people falling into poverty. The health expenditures in the GDP are therefore not to be reduced; instead the focus needs to be on providing more bang for the buck.
The third possibility is reducing the amount of the basic income offered. We achieved the results we did in our pilot even though we offered a miniscule amount (only Rs. 300 per person per month).
Let me conclude by relating a conversation I had recently with a bureaucrat. Though interested in the concept of basic income per se, he wondered if it would not be an admission of guilt by the polity on how they had failed India’s poor through their welfare schemes. Perhaps we have, I responded. There is no running away from the evidence on the leakages and poor targeting that plague India’s major centrally sponsored schemes. Perhaps it is time to give India’s poor a stake in their own development. Perhaps basic income is an idea whose time has come.
The article is written by Ms. Soumya Kapoor Mehta, Development Economist and Co-Author of Basic Income: A Transformative Policy for India for FICCI’s Economy Watch.