Universal Basic Income an alternative to state subsidies: Economic Survey -Governance Now

Universal Basic Income an alternative to state subsidies: Economic Survey

UBI is a powerful idea whose time even if not ripe for implementation, is ripe for serious discussion

GN Bureau | January 31, 2017

#Arun Jaitley #Economic Survey #Universal Basic Income #Mahatma Gandhi

The Universal Basic Income as an alternative to the various social welfare schemes to reduce poverty was advocated in the Economic Survey 2016-17 tabled in parliament by finance minister Arun Jaitley on Tuesday.

Read: Free money? Seriously?

The Survey juxtaposes the benefits and costs of the UBI scheme in the context of the philosophy of Mahatma Gandhi. It states that the Mahatma, as astute political observer, would have anxieties about UBI as being just another add-on government programme, but on balance, he may have given the go-ahead to UBI.

Read: How basic should basic income be?

The Survey says the UBI, based on the principles of universality, unconditionality and agency, is a conceptually appealing idea but with a number of implementation challenges lying ahead especially the risk that it would become an add-on to, rather than a replacement of, current anti-poverty and social programmes, which would make it fiscally unaffordable.

Based on a survey on misallocation of resources for the six largest central sector and centrally sponsored sub-schemes (except PDS and fertilizer subsidy) across districts, the Economic Survey points out that the districts where the needs are greatest are precisely the ones where state capacity is the weakest. This suggests that a more efficient way to help the poor would be to provide them resources directly, through a UBI.

The Survey points out that the two prerequisites for a successful UBI are: (a) functional JAM (Jan Dhan, Aadhar and Mobile) system as it ensures that the cash transfer goes directly into the account of a beneficiary and (b) Centre-State negotiations on cost sharing for the programme.

The Survey says that a UBI that reduces poverty to 0.5 percent would cost between 4-5 percent of GDP, assuming that those in the top 25 percent income bracket do not participate. On the other hand, the existing middle class subsidies and food, petroleum and fertilizer subsidies cost about 3 percent of GDP.

The Survey concludes that the UBI is a powerful idea whose time even if not ripe for implementation, is ripe for serious discussion.

Comments

Other News

Here’s an I.D.E.A. for career growth and success

Success in today’s professional organisation is no longer solely determined by academic qualifications, technical expertise or years of experience. While these attributes do matter, organisations increasingly value individuals who demonstrate the right mindset and behavioural qualities. The ability

PM interacts with CEOs, founders of space startups

Prime minister Narendra Modi interacted with CEOs and Founders of 20 Space Startups at Seva Teerth on Friday. CEOs of leading companies in the space sector working in diverse fields ranging from building rockets and reusable semi-cryogenic launch vehicles, avionics, satelli

From one cow to a dairy business

In 2012, Anita Dash wasn`t dreaming of building a dairy brand. She wasn`t studying business models or planning market expansion. Like countless mothers across India, her focus was on something much simpler: giving her children a better future. At the time, her most valuable

Ethanol blending: The two sides of a story

India`s crude oil consumption is estimated to be around 88.5% imported from abroad. This one single figure is also responsible for why ethanol has become both an economic strategy and fuel policy at the same time. In an economy like India, which depends so heavily on foreign oil, any increase in internat

Food inflation: Not a macroeconomic statistic but a developmental indicator

India`s retail inflation shows a reassuring picture at first glance. According to the latest data, Consumer Price Index (CPI) inflation edged up to 4.38% in June 2026 from 3.93% in May 2026, but continued to remain within the Reserve Bank of India`s (RBI) target band of 4% (+/- 2%). However, beneath this

Skin in the game or masterful market timing?

When a company founder opens their personal chequebook to buy shares in their own business, stock markets usually applaud. To the average retail investor, it feels like the ultimate vote of confidence, a sign that the people running the show have real skin in the game and believe brighter days are ahead.