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iasparliament
February 02, 2019
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What is the issue?

  • The 2019 budget announced the Pradhan Mantri Kisan Samman Nidhi, guaranteeing direct income support for farmers.
  • This has renewed the debate on the idea of a universal basic income (UBI).

What is the PM Kisan Samman Nidhi?

  • Vulnerable landholding farmer families, having cultivable land of up to 2 hectares, will be provided direct income support of Rs. 6,000 a year.
  • This is to help them meet farm input and other costs during the crop season.
  • The programme would be made effective retrospectively from December 1, 2018.
  • It would be fully funded by the Union Government. The interim Budget provides Rs. 75,000 crore for the present and the next year.

What is the UBI concept?

  • The idea of universal basic income (UBI) is essentially transferring some income to every citizen.
  • This is built on the twin principles of universality and a notion of minimum basic income to those living at the poverty line.
  • The principle of universality is at the core of it given the problems of targeting.
  • Although the idea of universal basic income (UBI) has been in discussion for decades, no country has implemented it.
  • While a proposal for UBI was rejected by a three-fourth majority in Switzerland, Finland which started a pilot has now discontinued it.
  • But even in Finland, the pilot was not a strict UBI but a social protection scheme aimed at only the unemployed.
  • There have been some pilots by NGOs in developing countries in Asia and Africa.
  • But they have varied in content of transfer and coverage with only few being fully universal.

What about targeted support?

  • The proposals in the Indian context have mostly been for a targeted income transfer scheme and not UBI.
  • Some form of income support to those who are unable to participate in labour market has been there in most countries in some form or other.
  • E.g. in India, the National Social Assistance Programme (NSAP) pensions for widows, elderly and the disabled

How does India's UBI proposal differ?

  • In developed countries, the UBI is supposed to supplement existing social security provisions.
  • So it would be over and above the universal provision of health, education and so on.
  • But in the Indian context, the arguments in favour of UBI are centred on the inefficiencies of existing social security interventions.
  • Essentially, UBI in India seeks to replace some of these interventions with direct cash transfers.

Why are cash transfers flawed?

  • The targeted cash transfer scheme envisions the role of the state to only providing cash income to the poor.
  • This approach seeks to absolve the state of its responsibility in providing basic services such as health, education, nutrition and livelihood.
  • Besides, it is unfair, as it seeks to create demand for services without supplying the services, leaving the poor to depend on private service providers.
  • Evidently, privatisation of basic services such as health and education leads to large scale exclusion of the poor and marginalised.
  • In any case, India is among the countries with lowest expenditure to GDP ratio as far as expenditure on health, education and so on are concerned.

How are in-kind transfers a better option?

  • Cash transfers are not encouraging in terms of leakages compared to other schemes of in-kind transfer such as the public distribution system (PDS).
  • A move towards universalisation and use of technology enabled Chhattisgarh and Tamil Nadu to reduce leakages in the PDS.
  • It shows that universalisation is the key to efficient delivery of services against targeting proposed by the cash transfer schemes.
  • Also, the cash transfer proposals claim that it would address everything from agrarian crisis, malnutrition, educational deficit to job crisis.
  • But again the PDS shows that in-kind transfers are twice as effective in increasing calorie intake compared to equivalent cash transfer.
  • Similarly, the crisis in agriculture is unlikely to be resolved by income transfers, where addressing pricing, procurement and other structural issues are essential.
  • Likewise, there are different reasons for persistence for some of the above problems which cash transfer may not wholly address.

What is to be done?

  • An appropriate way to address poverty is to enable the citizens to earn their living by providing jobs.
  • For those who are willing to work, schemes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme should be strengthened.
  • Nevertheless, cash transfers would be relevant for those who are unable to access the labour market or are marginalised due to other reasons.

 

Source: The Hindu

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