Universal Basic Income plan won’t end govt’s responsibilities: CEA – Hindu Business Line

Chief Economic Advisor Arvind Subramanian says India can afford it only if a few of the existing welfare programmes are phased out

Kochi, March 14:

Chief Economic Advisor Arvind Subramanian sought to allay the fears on Universal Basic Income (UBI), saying the scheme will not replace the basic responsibilities of the government in extending healthcare facilities and education.

It is the responsibility of the government to provide the services in these sectors to its citizens. The UBI will be feasible only if it replaces some of the government programmes such as fertiliser subsidies, employment guarantee scheme etc, he was responding to a question posed at the 15th Federal Bank KP Hormis Commemorative lecture here on the topic Surprises of the Indian Economy.

The resources for the UBI can be mobilised from the buoyant tax collection under the GST regime. In principle, it will be a universal basic income, but the target will be the poor and deserving, excluding the under-serving ones.

The UBI will be a better option than other welfare schemes rolled out by the government. The Centre alone has 950 such programmes, whereas States have its own welfare schemes. On evaluation, we find that India can afford it only if a few of the existing welfare programmes are phased out, he added.

The CEA also emphasised the need to give prominence to creating health and education infrastructure in the country, where its greater part is currently witnessing time lags in these sectors. There is no competitive dynamics in health and education in India and even political parties are not interested in taking these issues in election campaigns while canvassing for votes, he said.

According to him, 2016 will go down in history as the year in which several advanced economies such as the US and Europe decided to change its development model by becoming more inward looking, retreating from open market and globalisation.

If the world becomes more protectionist, there could be a big impact on Indian economy, affecting our exports and growth rate, he said, and recommended open market for India, like the Chinese way. There is also a need to mobilise a coalition of middle-income countries, he added.

According to Subramanian, large-scale migration is happening in the country, as there exists two India. It is estimated that around 8-9 million people migrate within the country annually. However, South Indian States such as Kerala, Tamil Nadu, Karnataka and West Bengal are ageing populations and relate to slow growth. But hinterland India is actually young, especially in States such as UP, Uttarakhand, Bihar, Jharkhand. Migration, therefore, happens from India to older India, he said.

(This article was published on March 14, 2017)

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Universal Basic Income plan won't end govt's responsibilities: CEA - Hindu Business Line