THE HIGH COST OF EQUALITY
Annual economic surveys are dry documents, intended to summarise the year gone by and point at the direction the economy is taking. Arvind Subramanian, the Chief Economic Advisor, has more ambition, as indicated by the sprightly phrasing, the blockbuster quotations, and intriguing chapter titles. What, for instance, to make of ‘Universal Basic Income: A Conversation with and within the Mahatma’?
UBI, Subramanian writes, is an “idea whose time has come perhaps not for immediate implementation but at least for serious public deliberation”. What would the Mahatma do, he asks, before concluding that he would, despite some philosophical conflicts, endorse the idea that every citizen of the country should receive the minimum amount needed for basic needs.
According to the economic survey, UBI would cost between 4 and 5 per cent of the GDP. Subramanian is unequivocal that UBI would not be an additional scheme but a replacement. In effect, it would be the only scheme, with beneficiaries receiving money directly. There are some 950 schemes and sub-schemes that account for 5 per cent of the GDP, of which the top 11 alone account for some 50 per cent of the money available. The schemes are labyrinthine and still the poorest are often excluded. An estimate from 2011-2012 suggests 40 per cent of the bottom 40 per cent of the population are excluded from the public distribution system.
Still, just days before Subramanian presented the
A 2011-12 estimate says the PDS excludes 40% of the bottom 40% of India
survey, Arvind Panagariya, vice-chairman of the Niti Aayog, argued that India did not have the fiscal resources to implement UBI for all citizens. He pegged the cost at Rs 15.6 lakh crore a year. During 2016-2017, the Centre estimates it will spend Rs 2.5 lakh crore on subsidies and a further Rs 38,500 crore on the rural employment guarantee programme.
The results of two pilot projects in Madhya Pradesh have been promising, with the monthly cash payment leading to improved health and nutrition. But other schemes, in Puducherry for instance, have revealed weaknesses. “The irresistible force of even as powerful an idea as UBI”, Subramanian cautions, “will run into the immovable object of a resistant, pesky reality.” And the reality of India represents a formidable barrier.
STATE OF THE NATION: Arvind Subramanian presents the Economic Survey