India's main opposition promises universal basic income for poor
India’s main opposition Congress party has said it will implement a variation of a universal basic income (UBI) targeted at the poor if it wins the country’s upcoming national election.
The announcement, dismissed by the ruling Bharatiya Janata party (BJP) as financially irresponsible, is the first major shot in an election battle likely to be replete with populist giveaways to voters.
“We have decided that every poor person in India would be guaranteed a minimum income after the Congress forms the government in 2019,” the Congress leader, Rahul Gandhi, told a farmers’ rally in the central state of Chhattisgarh on Monday. “No one will go hungry in India, no one will remain poor,” he said.
Congress won Chhattisgarh’s statehouse and two others in local elections in December thanks largely to anger among farmers at the persistent low prices being fetched by crops. More than 49% of Indians are employed in agriculture and their distress could be a decisive factor when people begin voting in April.
Congress’s former finance minister P Chidambaram said more details of what he called “a turning point in the lives of the poor” would be revealed in the party’s manifesto.
It is unclear whether the minimum income guarantee, likely to take the form of a direct cash transfer, would replace subsidies on food, petrol and fertilisers valued at 2.64tn rupees (£28bn) for all Indians in the 2018-19 budget.
Chidambaram tweeted that a UBI had been discussed extensively and that “the time has come to adapt the principle to our situation and our needs and implement the same for the poor”.
Praveen Chakravarty, from the Congress’s data analytics department, said late on Monday the income given to each household would vary depending on their earnings.
“It’s actually a progressive scheme where there will be a certain threshold for minimum income that would be decided and fixed and those that fall below that threshold at varying degrees will be compensated with income transfers to ensure there is a basic minimum income support for every poor household in the country,” he said.
“It will not be the same amount for everybody, it will depend on how poor each household is.”
In principle, a UBI involves paying all citizens an unconditional monthly sum regardless of whether they work and how much they earn, and which they can use as they wish. It is intended to replace all existing social benefits.
Its proponents on the left argue that it has the potential to eliminate poverty, while those on the right believe it can streamline the welfare system. Both also hope it could insulate workers against the threat of the mass automation of jobs.
The idea has gained momentum in recent years and has been trialled on a small scale in places including Finland, Italy, Canada and the Indian state of Madhya Pradesh. The government of Sikkim, another Indian state, promised to implement a UBI within three years if re-elected. The Congress plan appears to be closer to a social security scheme than a traditional UBI.
A BJP spokesman said the idea was unaffordable. “Where will the money come from? He’s promising the moon to fool the people,” Gopal Krishna Agarwal told Reuters.
Agarwal said the government had examined a UBI in 2014 but concluded that eliminating all subsidies would provide only enough funds to pay 6,000 rupees per family per month, less than what is required to feed them.
The BJP hands down its last budget before the election on Friday and is expected to use the opportunity to try to assuage farmers as well as its traditional small-business base.
India’s former chief economic adviser Arvind Subramanian in 2016 floated the idea of granting 1,500 rupees every month for poor households. On Monday he released a report proposing another variation on the UBI: giving 18,000 rupees each year to a rural household except those that are “demonstrably well off”. He and his coauthor estimated the cost of the plan at 2.64tn rupees.
Around 21.9% of Indians are believed to fall below the poverty line, according to World Bank analysis of data from the most recent census in 2011.
Gandhi said on Monday: “We do not want two Indias in this country. There will be only one India and the Congress government will ensure a minimum income to every poor person in the country.”
Chidambaram said the party would find the resources to implement the scheme. “The poor of India have the first charge on the resources of the country,” he added.