Towards a ‘basic monthly wage’
A lively open discussion was held this week at the ‘Hatch’, a space for start-ups, in Colombo Fort organised by ‘Advocata’ on the topic ‘Should the government give Sri Lanka’s poorest citizens a basic monthly income.’
The idea of a ‘universal basic income’ (UBI) or its variant the ‘ basic income guarantee’ is gaining ground as a policy proposal to address poverty and equal opportunity. From the US to Finland to India, ‘free money’ experiments are seeing whether the best way to help the poorest in our society is to simply give money to them directly.
Should Sri Lanka enact a similar proposal? Does Sri Lanka have the fiscal space to implement a basic income guarantee? Is basic income guarantee a moral imperative or is it a moral hazard, were the things that were widely discussed.
On the sidelines of the discussion the Business Times spoke to Dhananath Fernando, Chief Operating Officer, Advocata to find out the concept behind the whole issue.
He said that this is a conversation on UBI which is now being discussed widely. This is something that is proposed to eliminate the various kinds of subsidies, like the fertiliser subsidy, etc for different sections of the citizens, specially the poorest at the bottom of the pyramid and they are to be replaced with one payment of a basic monthly income. This is the argument now put across to give everyone a basic income to receive something like Rs. 2,000 or Rs. 5,000 which could replace the subsidies.
This basic income can be utilised to spend on their basic expenditure. He said that in India also some proposal to that effect has emerged to pay around Indian Rs. 6,000 which is equivalent to around Sri Lankan Rs. 15,000.
The suggestion is that this is one payment you give to everyone even to the richest person. So, it is equal, on a level playing field where everyone at least has money to settle their expenditure and the other argument that is now fielded is “you give only to the poorest people what is affordable.” In the Sri Lankan context, Mr. Fernando said: “A couple of arguments that came up were politicised in nature. One government would offer Rs.4,000. Another political party would say offer Rs. 6,000 and then another one would offer Rs. 8,000 and at some point it would become unaffordable for the National Budget.”
Prof. Rohan Samarajiva, Advisor to Advocata Institute and who has been interested in social policies making a contribution at this discussion said that a monthly salary to all the citizens and mainly focusing on those who are below the poverty line to receive this monthly payment is the centre of the discussion.
A person for example living below the poverty line gets Rs. 15,000, and then those who are near the poverty line would be demotivated.
The major issue, Prof. Samarajiva pointed out was that this would become a major political issue.
Advocata also arranged for Dr. Shantayanan Devarajan, Economist for the Asian Region, World Bank to participate in the discussion through Internet.
Responding to the views expressed by the participants, he said that why it is important is that the present system of subsidies are not directed well.
While there is some foreign collaboration, Advocata is a local think- tank working on policy research and policy ideas based on hard-work and exchange.
In Sri Lanka, ‘Samurdhi’ or the earlier ‘ Jana Saviya’ can somewhat be compared to UBI and it was pointed out that UBI should be a basic human right to meet human needs and decent living and they are aimed at reducing poverty.
This basic income can be utilised to spend on their basic expenditure. He said that in India also some proposal to that effect has emerged to pay around Indian Rs. 6,000 which is equivalent to around Sri Lankan Rs. 15,000.