No fiscal resources for universal basic income: Niti Aayog chief Arvind Panagariya

The proposed scheme could possibly replace the 1,000-odd schemes that the government runs for poverty elimination like MGNREGA, PDS, Indira Awas Yojana, etc.

Written by P Vaidyanathan Iyer | New Delhi | Published:January 25, 2017 4:36 am
Arvind Panagariya, Niti Aayog, fiscal resources, basic income, Universal Basic Income scheme, Arvind Subramanian, indian express news, india news, business news, busget Vice Chairman of Niti Aayog Arvind Panagariya

NITI Aayog Vice Chairman Arvind Panagariya is of the firm view that the country simply does not have the necessary fiscal resources for a Universal Basic Income scheme, a proposal being advocated by Chief Economic Advisor Arvind Subramanian. Subramanian will delve upon the possibilities of such a scheme in the Economic Survey which, if accepted by the government, could be an unprecedented decision anywhere in the world.

In an interview to The Indian Express, Panagariya said, “At the current level of income and our needs for investment in health, education, infrastructure and defence, we simply do not have the necessary fiscal resources to transfer a reasonable basic income to 130 crore Indians.” While judgments would vary on what a reasonable sum is, he illustrates the staggering resource needs, taking the Tendulkar committee’s poverty line at 2011-12 prices.

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“The Tendulkar urban poverty line at 2011-12 prices is Rs 1,000 per person per month. Due to inflation between 2011-12 and now, at today’s prices, this sum would be significantly larger. But transferring even Rs 1,000 per month to all Indians would cost Rs 15.6 lakh crore (Rs 1,000 x 12 months x 130 crore people) a year. We simply do not have this magnitude of fiscal resources,” Panagariya said.

Addressing an audience gathered for an inter-faith meeting last October at Sabarmati, the birthplace of Mahatma Gandhi, the Chief Economic Advisor explained in detail the government’s proposed UBI scheme which entailed making an unconditional cash transfer of about Rs 10,000-Rs15,000 a year to every citizen. The proposed scheme could possibly replace the 1,000-odd schemes that the government runs for poverty elimination like MGNREGA, PDS, Indira Awas Yojana, etc.

Panagariya said he would personally prefer that the government first targets the poor. “Any attempts to broaden the beneficiary base would come at the cost of a reduction in the possible transfers to the poor. With the help of the Socio-Economic Caste Census, we are able to identify the poor with reasonable degree of confidence,” he said.

The Niti Aayog Vice-Chairperson has, himself, for long advocated cash transfers to the poor. “But we simply lack the financial resources to make such transfers to even the bottom 30 per cent or 40 per cent of the population if the transfers to be on top of the existing schemes,” he said in response to a question if the UBI should be over and above various schemes for the poor. “So, the only practical option would be to give the beneficiary a choice between cash and in-kind transfers, as Renana Jhabvala of SEWA suggested a few years ago,” he said.

Jhabvala had co-authored a book with two others Sarath Davala, a senior researcher at SEWA and Guy Standing, a professor of development studies in University of London. While drawing from two pilot schemes in Madhya Pradesh, the book explores whether a “basic income” can be transformative in economic development and growth besides improving individual and family welfare.

According to Panagariya, cash transfers would be feasible only after all beneficiaries have Aadhaar seeded bank accounts and Aadhaar verification becomes fully feasible for the existing schemes. “Without it, verification that a beneficiary has not received both cash and in-kind transfers would not be feasible,” he said.

Panagariya further said he was not aware if any country has implemented a universal basic income scheme so far. “Switzerland put the idea to a vote in June 2016. An overwhelming 77 per cent of the Swiss voters chose to reject it. Scotland has also appeared in the news, but they are some distance away from conducting even a pilot,” he pointed out.

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