Thumbs up to UBI

Three learned articles by Professor Pranab Bardhan in your newspaper, ending on June 11, have covered a lot of ground towards introducing Universal Basic Income (UBI) in India. It has been in the realm of discussion for some time. Now National Human Rights Commission has also reported that it is under the active consideration of the central government. Prof Bardhan has covered the theoretical side quite extensively to justify it. He has insisted on calling it universal though surely he wants to exclude the middle class and the rich. The exclusion method is better, he says. I think the other method of covering those up to a certain level of income is just the same. Either way we have to decide on a cut-off point. We need not debate it now. He rightly points out that UBI is not meant for removing economic inequality but for relieving economic insecurity.

There are real issues about implementing the whole scheme. A large question remains whether the existing schemes of helping the poor, like MGNREGS and other schemes for subsiding food, transport etc, should continue. These cannot be discontinued. With these as ongoing expenditure, the cost for UBI will be too much. He has not given a definitive version. Prof Bardhan has done a yeoman service to India by discussing how the fiscal burden will be met for the UBI, but there are a lot of loopholes in his suggestions. He wants to remove exemptions for special economic zones as some are wasteful. This is not quite correct and his writing is conjectural. A fuller discussion is necessary. Corona levy is another suggestion, which will not get much income and it would be for one year only. Tax on wealth and inheritance is also his suggestion. All these are fundamental issues. During the post-corona period it is simply impracticable.

However, I agree with the conclusion that once we accept the UBI in principle, we can implement it in the near future. The central government should invite him to come and have a week-long discussion with the fiscal bureaucrats like expenditure secretary, revenue secretary, but no more economists. No need to talk generalities but only practical ways of implementation. I support UBI.

Sukumar Mukhopadhyay (retired member, CBEC) via email

Pranab Bardhan responds:

My scheme of UBI does not exclude the rich or middle classes. I have given arguments why both should be included. I also do not propose any discontinuation of MGNREGS or PDS. Even so, with with 2.5 per cent of GDP, UBI can get each family, rich or poor, roughly about ~20,000 per year. There are several empirical studies (some published I think in EPW) showing the problems in the SEZS and how some of the investment would have taken place even without the tax concessions. In any case, only half of all tax exemptions are taken to fund the UBI. Corona levy is suggested not for the UBI but for funding the immediate overhauling of the public health system in fighting the virus. Letters can be mailed, faxed or emailed to: The Editor, Business Standard, Nehru House, 4 Bahadur Shah Zafar Marg New Delhi 110 002

Fax: (011) 23720201 · E-mail: letters@bsmail.in All letters must have a postal address and telephone number