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LATEST NEWS UPDATES | Cash-for-all worth a debate: Economic Survey

Cash-for-all worth a debate: Economic Survey

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published Published on Feb 1, 2017   modified Modified on Feb 1, 2017
-The Times of India

NEW DELHI: Universal Basic Income (UBI) or direct cash transfer is a powerful idea that mandates serious discussion, the Economic Survey said on Tuesday as it presented scenarios both for and against the scheme — which is aimed at eradicating poverty. It said that a UBI that reduces poverty to 0.5% would cost between 4-5% of GDP, assuming that those in the top 25% income bracket do not participate.

On the other hand, the existing middle class subsidies and food, petroleum, fertiliser subsidies cost about 3% of GDP. UBI is a concept which is gaining ground in several countries. Trials are being conducted in Scotland and Finland, while Switzerland voted on and rejected the plan. The chapter, headlined 'A Conversation With and Within the Mahatma', offers several illustrations. 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 "especially the risk that it would become an add-on to, rather than a replacement of, current antipoverty and social programmes, which would make it fiscally unaffordable".

"The Mahatma as the embodiment of universal moral conscience would have seen the possibility of UBI in achieving the outcomes he so deeply cared about and fought for all his life. But the Mahatma as moralist would have had doubts because of seeing uncompensated rewards as harming responsibility and effort," the survey stated. "As a fiscal conservative he would permit UBI only if convinced that macro-economic stability would not be jeopardised. Recognising the difficulty of exit, the Mahatma as astute political observer would have anxieties about UBI as being another add-on government. But on balance he may have given the go-ahead to the UBI. Or so one might tentatively infer," it said.

Based on a survey on misallocation of resources for the six largest central sector and centrally sponsored subschemes (except PDS and fertiliser subsidy) across districts, the survey points out that 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 said. The survey points out two prerequisites for UBI — 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 Centrestate negotiations on costsharing for the programme.

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The Times of India, 1 February, 2017, http://timesofindia.indiatimes.com/business/economic-survey/cash-for-all-worth-a-debate-economic-survey/articleshow/56902576.cms


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