The union government in its recent economic survey proposed for a universal basic income.
This is a form of social security in which all citizens of a country receive a regular, unconditional sum of money, independent of any other income.
Experts are of an opinion to rationalise on the characteristics of a basic income in India.
What are the considerations in this regard?
Form of support - The question is whether to support vulnerable sections in the form of goods and services or as cash.
Cash gives the discretion to beneficiaries to spend it any way.
On the other hand, provision of services or goods directly to beneficiaries may be directed to achieve certain objectives in terms of nutrition, health or education.
There are concerns of leakages and quality in provision as services.
For India, where the State is already providing a whole lot of services, income support as a supplement to existing services would be the best option.
Coverage - There is a need to rethink on the universality of the income.
The adoption of a universal basic income is bound to be a fiscal burden for a developing country like India.
The attempt must be to think in terms of reducing the number of beneficiaries using easily definable criteria. Some of it could be age, sex, etc.
It should however be ensured that strict targeting does not run into complex problems of identification.
Level of basic income - If we were to treat the cut-off used to define poverty as the minimum income, then the total fiscal burden would be enormous.
Level of concentration of poverty within the poverty line and the poverty line itself could be used to arrive at an optimum basic income level.
Support given under the MGNREGA can also be considered in this regard.
Financing the scheme - As per experts opinion, the scheme would be feasible if the total expenditure is limited to around 1.5 to 2% of GDP.
There are suggestions to rationalise the expenditure in certain areas to make up this cost. This includes
Exemptions in our tax system.
MGNREGS - as this employment scheme is very similar to the proposed basic income scheme.
Expenditure on fertilizer subsidies.
Higher income groups giving up the supplemental income.
Given all these the remainder must come from raising additional revenue.
Finally, the central government can seriously review the idea of basic income to making it a supplemental income.
