[<<There are reports that the ruling party in Sikkim has announced UBIS in its election manifesto, and, more intriguingly, ***the Centre is considering such a measure “for people below the Poverty Line”. The latter is a contradiction in terms: UBIS is an unconditional grant to all citizens, not just to the poor — that’s what “universal” means.*** [Emphasis added.] As I wrote in my earlier piece, many people, who are much above the official poverty line, suffer from variety of insecurities — farmers, of course, face weather and market risks but non-farmers also face several kinds of risks, including in their jobs, often in the informal sector, where some of them are refugees from agrarian and ecological distress or are victims of the recent disaster of demonetisation.
UBIS avoids the problem of deciphering who is poor and who is not, which is an intricate problem in India — the India Human Development Survey found that in 2011-12 about half of the officially poor did not have the BPL card, while about one-third of the non-poor had it. In any case I look upon UBIS not as an administratively easier anti-poverty programme; to me it is more a part of a citizen’s right to minimum economic security, a right which many countries recognise, but so far India does not, even though it should easily fall under the Supreme Court’s interpretation of the “right to life” in the Constitution.>> (Excerpted from sl. no. I. below.) <<In recent times both BJP (around election time in UP and Maharashtra) and Congress (in Punjab, and now Rajasthan, MP and Chhattisgarh) have rushed to the fire of farmer wrath with wild schemes of bank loan waivers. This is, of course, a bad idea not just because it plays havoc with the banking culture (just as that of loan waivers for corporate defaulters does), but most of it goes to help the middle and large farmers (more than two- thirds of our farmers are marginal farmers with less than 1 hectare of land, only 20% of whose loans are from institutions like banks, they owe the rest to private lenders, which the waiver programme will not touch).>> (Excerpted from sl. no. II. below.)] I/II. https://indianexpress.com/article/opinion/columns/making-ubis-work-universal-basic-income-supplement-below-poverty-line-5540241/?fbclid=IwAR2Uj70Rz_qHzZ_VOW3qBctV0SDN7mvSFaYrMGp0yhjyZeNn15Ef_IRyhDg Universal Basic Income can be funded by reducing subsidies to the rich I think packaging a significant UBIS with a simultaneous increase in the taxes on the rich will help macro-economic stability, apart from assuaging the poor who will face some of the price rise in commodities or services, when subsidies are withdrawn. Written by Pranab Bardhan | Updated: January 16, 2019 7:23:30 am Since UBIS is to be given to the rich and the middle classes as well, it can be expensive. After my last op-ed in this paper (‘The safety net of the future) several readers, intrigued by the idea of a Universal Basic Income Supplement (UBIS) proposed in the article, asked me to elaborate. Hence this article. There are reports that the ruling party in Sikkim has announced UBIS in its election manifesto, and, more intriguingly, the Centre is considering such a measure “for people below the Poverty Line”. The latter is a contradiction in terms: UBIS is an unconditional grant to all citizens, not just to the poor — that’s what “universal” means. As I wrote in my earlier piece, many people, who are much above the official poverty line, suffer from variety of insecurities — farmers, of course, face weather and market risks but non-farmers also face several kinds of risks, including in their jobs, often in the informal sector, where some of them are refugees from agrarian and ecological distress or are victims of the recent disaster of demonetisation. UBIS avoids the problem of deciphering who is poor and who is not, which is an intricate problem in India — the India Human Development Survey found that in 2011-12 about half of the officially poor did not have the BPL card, while about one-third of the non-poor had it. In any case I look upon UBIS not as an administratively easier anti-poverty programme; to me it is more a part of a citizen’s right to minimum economic security, a right which many countries recognise, but so far India does not, even though it should easily fall under the Supreme Court’s interpretation of the “right to life” in the Constitution. I am often asked: Do you want the government to give money to the Ambanis as well? My answer is yes, as citizens they are entitled to it, just as they have the right to get police protection, even though they can afford their own protection. (If in practice some rich people do not claim it or if there are transparent ways of excluding them — for example those above a certain threshold in income tax return or owning cars, etc. — I will not object strenuously, even though the conceptual point of a citizen’s right remains). Since UBIS is to be given to the rich and the middle classes as well, it can be expensive. In my earlier piece, I suggested funding it from reducing some of the subsidies that are at present enjoyed mainly by the better-off, also taking a bit from the various tax concessions mostly to business (called “revenues foregone” in the Central Budget), and taxing the currently exempt wealth, inheritance, and long-term capital gains, and collecting more taxes from the currently under-assessed and under-taxed property values. Only a quarter of the 10 per cent of GDP thus potentially mobilisable could go to UBIS; the rest can be spent on infrastructure, health and education. This allows roughly a grant of about Rs 16,000 to each household. If, to start with, it is given only to women, it’ll halve the cost (in my earlier piece there are typos in the cost estimates given for UBIS for only women; the correct amount should be about Rs 2.1 trillion, at 1.25 per cent of the GDP). The special treatment to women is recognition of the hard work most of them do for their households, and outside. It is also a means to raise their (currently low) autonomy and status within the Indian family. Of course, the better-off (businessmen, large farmers, the salaried class) will not easily give up on the subsidies they have enjoyed all these years or pay substantially more taxes. But without that, if UBIS merely adds significantly to the fiscal deficit or is funded by scaling down some of the current major anti-poverty programmes, then I’ll be generally against it. It will only show that the policy-makers are politically afraid to touch the rich. (This does not mean that the current anti-poverty programmes do not need to shed their waste and inefficiencies). I think packaging a significant UBIS with a simultaneous increase in the taxes on the rich will help macro-economic stability, apart from assuaging the poor who will face some of the price rise in commodities or services, when subsidies are withdrawn (for example, the price of urea will rise for all farmers, if the fertiliser subsidy is curtailed, even though most of the subsidy goes to large farmers and factories). It is also important to keep in mind that if the declared UBIS amount is too small, only serving as a rhetorical token before elections, people will see through it as another electoral “jumla”, too many of which have been associated with the current regime. Then there are some practicalities of UBIS any policy-maker has to consider. One, how do you reach everybody in India when many people still do not have bank accounts or access to banking agents (although once such a programme starts, banking agents are likely to be induced to expand their operations, as fixed costs are spread out over larger numbers)? Two, Aadhaar or some other form of identification will be necessary, but the horror stories one has heard about the poor being denied PDS because of the lack of Aadhaar authentication make one wary of bureaucratic callousness in this respect. Three, UBIS needs to be transparently linked right from the beginning to some cost of living index — this is particularly important because of the callous way Indian governments have let their contribution under the National Old Age Pensions Scheme stagnate at a measly Rs 200 per month per pensioner for the last 12 years. Four, UBIS could be different for adults and children, but one probably should not go that way because in the absence of proper age records it may give an opportunity to some corrupt officials. Five, how should the grant money be allocated between the Centre and the states? The state governments have to be part of the active negotiations. Different states may have different fiscal capacities and also different kinds of logistical capabilities in reaching out to people particularly in remote areas. In the estimate for subsidies to the better-off (referred to in my earlier piece), state-level subsidies have been included. In the beginning, however, the central government may have to bear most of the cost, and the Finance Commission may have to work out the eventual modalities of allocation of the burden between the Centre and the states. Cabinet clears next gen IT-filing system; Infosys to implement Rs 4,242-cr project UBIS is a policy issue that requires our serious attention and deliberation. It is not one for politicians in desperation for something to do for angry voters just before elections. II. https://indianexpress.com/article/opinion/columns/india-poverty-social-inequality-the-safety-net-of-the-future-5512511/ The safety net of the future In recent times both BJP (around election time in UP and Maharashtra) and Congress (in Punjab, and now Rajasthan, MP and Chhattisgarh) have rushed to the fire of farmer wrath with wild schemes of bank loan waivers. This is, of course, a bad idea not just because it plays havoc with the banking culture (just as that of loan waivers for corporate defaulters does). Written by Pranab Bardhan | Updated: December 28, 2018 11:37:51 am While most measures suggest that only around one-fifth of the population today is under the official poverty line, large sections of those even much above that line are subject to brutal economic insecurities of various kinds (Representational) If social inequality is the most acutely felt social problem in India, insecurity, more than poverty, is the most acutely felt economic problem. While most measures suggest that only around one-fifth of the population today is under the official poverty line, large sections of them even much above that line are subject to brutal economic insecurities of various kinds (due to weather or health risks, market fluctuations, job uncertainties, etc.). Anxiety about such insecurities occasionally spills over into the streets and politicians wake up and feel they have to do something. In recent times both BJP (around election time in UP and Maharashtra) and Congress (in Punjab, and now Rajasthan, MP and Chhattisgarh) have rushed to the fire of farmer wrath with wild schemes of bank loan waivers. This is, of course, a bad idea not just because it plays havoc with the banking culture (just as that of loan waivers for corporate defaulters does), but most of it goes to help the middle and large farmers (more than two- thirds of our farmers are marginal farmers with less than 1 hectare of land, only 20% of whose loans are from institutions like banks, they owe the rest to private lenders, which the waiver programme will not touch). Some politicians are now paying attention to the politically successful Rythu Bandhu example of income support to Telengana farmers (at about Rs. 10,000 per hectare). The idea of income support is better than price support for farm products (which in any case does not help small farmers who mostly sell their produce to the traders at harvest time, and also applies in practice to a very limited number of crops and states). But it requires much better land records than we have in most states and leaves out the large numbers of even poorer landless workers. All this distress arises directly or indirectly from India’s singular failure in creating enough secure jobs. The farm distress is ultimately because of low productivity (due to lack of enough irrigation, cold storage and extension service, apart from the effects of climate change), and the low-earning farmers themselves want to move to non-farm jobs. This has been a failure of all political parties over many decades. The recent finger-pointing to the Prime Minister for the failure on the job front is only because he has been the loudest in promising jobs. The absence of secure jobs is also behind agitations on job reservations even by dominant castes (marathas, patidars, jats, kapus, etc.) and behind the mobilisation of lumpen elements of the ruling party affiliates in various incidents of extortion in the name of cow protection and minority lynchings. We know that the highly defective loan waiver programme, if applied to all states in India, will easily cost more than 4 trillion rupees. The farm income support plan at the Telangana rate for all of India will also come to more than half of that amount. To put our mind to the difficult task of creating a sufficient number of secure jobs is, of course, highly imperative. But it is a long-term project (with some exceptions like the important proposal for extending the employment guarantee scheme to urban-sector public works as well). Meanwhile extending schemes of social protection for relief of the massive economic insecurity is urgent and politically expedient. One idea is that of a Universal Basic Income Supplement (UBIS), which avoids some of the problems that we have mentioned for loan waivers and farm income support per hectare, and also some of the administrative and incentive problems of most insurance schemes (the much-hyped current farm insurance premium subsidy scheme has been hobbled by low participation and tardy claim settlements, often benefiting private insurance companies more than the farmers). UBIS should be looked upon not as an anti-poverty programme, but mainly as part of the citizen’s right to minimum economic security. But what about the fiscal cost of UBIS? We know that the highly defective loan waiver programme, if applied to all states in India, will easily cost more than 4 trillion rupees. The farm income support plan at the Telangana rate for all of India will also come to more than half of that amount. The feasibility of a UBIS, of course, depends on the size of the supplement one has in mind, and mainly on the political will to increase the tax-GDP ratio, and (assuming that none of the existing major anti-poverty programmes will be significantly scaled down) to cut down on various subsidies largely enjoyed by the better-off sections of the population. It has been estimated that the latter subsidies (for the central and state governments together) currently come to about 6% of GDP; another 6% of GDP is in the form of “revenues foregone” or tax concessions in the central budget—take at most one-third of this (2%), since some of these concessions may be helping necessary business; think of another 2% of GDP from taxing currently exempted wealth, inheritance and long-term capital gains, and currently under-assessed and under-taxed property values in urban and peri-urban areas (at a time when the National Sample Survey evidence suggests that our wealth inequality is mounting, and is already in the Latin American range). All this adds to a mobilisable surplus of about 10% of GDP. There are important and legitimate claims on these resources for programmes of infrastructure building, health and education. But at least a quarter of these resources can pay for a decent UBIS for everybody (a household of 5 people can get about 16000 rupees per year). To start with, give it only to women, which will halve the cost; on a rough estimate it will then cost about 2.6 trillion rupees or about 1.6% of the current GDP. The fiscal bureaucrats, of course, will shake their heads and consider all this unrealistic. But we should let the politicians know that the potential is there to tax (and reduce the subsidies for) the better-off and address India’s staggering problem of economic insecurity. If we fail to do that it is a political failure for which we have to pay dearly (both in terms of economic welfare and our democracy) in near enough future. -- Peace Is Doable -- You received this message because you are subscribed to the Google Groups "Green Youth Movement" group. To unsubscribe from this group and stop receiving emails from it, send an email to greenyouth+unsubscr...@googlegroups.com. 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