India says it’s time to seriously consider universal basic income

Refugees in India receive cash assistance (Credit: European Commission / Flickr)

In a world of rising inequality and automation, the idea of a universal basic income is gaining momentum, from the most developed countries to some of the poorest. Finland made headlines when it launched a trial at the start of the year, and France’s left-wing presidential contender Benoît Hamon included it in his platform. Now, India’s chief economic adviser says it’s time for “serious public deliberation.”

“[Ghandi] would have been conflicted by the idea but, on balance, might have endorsed it,” Chief Economic Adviser Arvind Subramanian wrote in the annual Economic Survey released Tuesday ahead of today’s budget.

As rumors preceded the official report, advocates and opponents fiercely debated the feasibility of a government-paid minimum income to each of its citizens regardless of working status to be used at each person’s discretion.

One of the main concerns, of course, is incentive: If governments are freely handing out cash, would anyone work? But advocates – and the report – say that the amount given would not be enough to undermine employment. Instead, pilots conducted in India and elsewhere have shown that a guaranteed minimum income provides security in extreme circumstances and emancipates the poor to improve their conditions.

“You always have the rhetoric ‘Don’t give people a fish, but teach them to fish.’ But in Namibia there was once a nice cartoon about it. The cartoonist…said, ‘It’s fine to teach people how to fish, but what if they don’t have a fishing rod?'” said Dirk Haarmann, director of the Theological Institute for Advocacy and Research in Africa, in an interview with Humanosphere.

Haarmann and his wife, Claudia, conducted the first unconditional cash grant pilot worldwide in Otjivero, Namibia, from January 2008 to December 2009. Before the Self-Employed Women’s Association (SEWA) of India launched its own pilot funded by UNICEF in 2011 in Madhya Pradesh, they visited Otjivero.

Haarmann noted that despite the contextual differences between Namibia and India, the similar results from the two pilots were were “stunning,” especially in terms of nutrition, entrepreneurship, health. He recalled the surprise when one man from Otjivero saw pictures and heard stories from Madhya Pradesh.

“He said, ‘It could be the same here.’ [There were] the same stories of how people were freed of a survival economy and could make long-term economic decisions,” Haarmann said. “Poverty is not so different in different contexts.”

For countries like Finland that are facing high unemployment from automation, the government hopes UBI will incentivize the unemployed to seek or create even casual jobs without losing their benefits. But in developing or emerging economies like Namibia and India, the benefits are more fundamental.

Haarmann said that schools, for example, existed in Otjivero, but didn’t function until the basic income grant, because children didn’t have uniforms, supplies and most importantly, were malnourished, so they couldn’t learn. The Madhya Pradesh pilot reported the same result.

Adults also began to prioritize education and literacy for themselves once they were able to feed their children and grandchildren. After all, they now have money to manage and businesses to run.

In Otjivero, villagers even felt empowered enough to lobby the government for better sanitation, and health services followed the money so eventually the villagers didn’t need to spend their monthly grant on travel. Ultimately, because the same cash grant is given to every man, woman and child, the greatest benefits of UBI are pro-women and pro-poor.

Although, other concerns persist such as whether the money will be spent on alcohol and tobacco – which studies have proved to be unfounded – the main question comes back to feasibility: How much would it cost?

The Economic Survey gives a preliminary figure of 4.9 percent of GDP or less, depending on implementation measures. It’s conclusion is that as an add-on to existing social programs, UBI would be too costly; but as a replacement of certain subsidies and programs, it would be feasible. However, taking away existing benefits is sure to be met with political opposition, the report said.

Another concern, voiced even by those who support unconditional cash transfers, is that not enough evidence exists of its long-term benefits to families.

“The fundamental question is: If you give a family a lump sum grant, an unconditional cash transfer in one year are they better off several years later? Have you changed the trajectory of that family?” said Kevin Starr, managing director of Mulago, in an interview with Humanosphere. “I think cash transfers are potentially a hugely useful tool and I would really like to see them succeed. My opinion is that it is very important that we answer that question.”

In Kenya, Give Directly is organizing a 12-year randomized control trial in to do just that.

In the meantime, it seems that many governments and organizations are eager to test it out themselves. Still, successful trial runs still do not guarantee implementation. As Haarmaan said, “the question in the end is where does the political will come from to implement it?”

In Namibia, for example, Bishop Zephania Kameeta, one of the most prominent proponents of basic income, became the country’s first minister of poverty alleviation on the promise of UBI. But that was in 2015, and he has yet to implement any basic income plan. Kameeta’s office did not respond to Humanosphere’s request for comment.

Nevertheless, the conflict-ridden Indian state of Jammu and Kashmir already committed to UBI earlier this month, and almost six years after the Madhya Pradesh pilot, the Economic Survey says that “UBI is a powerful idea whose time, even if not ripe for implementation, is ripe for serious discussion.”

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Joanne Lu

Joanne Lu is a South Carolina-based writer and editor dedicated to global development, poverty alleviation and social justice. After a year in Rwanda, she now covers the Asia-Pacific and economics. Find her on Twitter @joannelu or email joanne@humanosphere.com.