Ahead of the Budget 2017, the Economic Survey 2016-17 has advocated the concept of Universal Basic Income (UBI) as an alternative to various social welfare schemes in an effort to reduce poverty.
The Finance Minister tabled the Economic Survey 2016-17 in the Parliament today. The survey terms UBI a scheme that could be an alternative to plethora of State subsidies for poverty alleviation.
"Based on a survey on misallocation of resources for the six largest Central Sector and Centrally Sponsored Sub-Schemes (except PDS and fertilizer subsidy) across districts, the Economic Survey points out that the districts where the needs are greatest are precisely the ones where State capacity is the weakest. This suggests that a more efficient way to help the poor would be to provide them resources directly, through a UBI," Finance Ministry said.
It also said that the two prerequisites for a successful UBI are: functional JAM (Jan Dhan, Aadhar and Mobile) system as it ensures that the cash transfer goes directly into the account of a beneficiary and Centre-State negotiations on cost sharing for the programme.
The Survey says that a UBI that reduces poverty to 0.5 percent would cost between 4-5 percent of GDP, assuming that those in the top 25 percent income bracket do not participate. On the other hand, the existing middle class subsidies and food, petroleum and fertilizer subsidies cost about 3 per cent of GDP.
Earlier, the Chief Economic Advisor had explained the government's proposed UBI scheme which entailed cash transfer of about Rs 10,000-Rs15,000 a year to every citizen.
He also indicated that the proposed scheme could possibly replace the 1,000-odd schemes that the government runs for poverty elimination like MGNREGA, PDS, Indira Awas Yojana, etc.