‘India should address income disparity’

Netherlands, France, Italy, Finland and Brazil making efforts towards inclusive growth

By Author  |  Published: 1st Oct 2018  12:12 amUpdated: 30th Sep 2018  10:11 pm
The UBI in some form or the other is being tested across the world. UBI is an amount to the bank account of every citizen every month.

Hyderabad: India has been witnessing a rise in inequality, mainly driven by income and gender gaps. Similarly the nation has done badly on several other indicators of equality. The country is home to 45 per cent of the ‘deprived’, a term used by the United Nations Development Programme (UNDP) for the unfortunates who suffer from ‘multi-dimensional poverty’.

Today, half a billion continue to ‘stand and wait’ outside the ‘inclusive’ purview, points out Vikas Singh, president, Crux Management Services.

An analysis of the data of the last 50 years points to the fact that increase in income inequality reduces GDP. Universal Basic Income (UBI) is currently one of the most debated policy themes to address income inequality, dignity of the poor, wellness to the deprived and life changing events such as economic depression etc. Poverty takes a huge toll on productivity and therefore the entire economy pays for itself many times over. UBI is an amount to the bank account of every citizen every month. No conditions attached.

The UBI in some form or the other is being tested across the world. A partial UBI has been in vogue for over 35 years in Alaska. A more recent and similar experiment is at work in several countries including Netherlands, France, Italy, Finland and in Brazil.

Vikas Singh told Telangana Today, “UBI can bring the deprived out of poverty. The income ‘earned’ will encourage investment in training, education, and in health. Entrepreneurship will be less risky, because of the ‘safety’ net, helping fight uncertainty and providing security to every Indian. Some of the States have ushered in this model, notably the Telangana government which provides some income to the farmers. No questions asked. The UBI model that could be rolled out nationally must identify ways to implement it, learn from it and move ahead.”

He adds, India has over 1,000 schemes for the poor, spending over 6 per cent of the GDP. Dismantling poorly targeted and badly implemented social-spending schemes, cutting spending on non-core sectors and curbing tax credits could pay for UBI. Efficiency will add another 10 per cent to the pot.

On the mode of implementation, he says, “Let’s start somewhere. Let’s start with the farmers. Let’s implement it in the 100 poorest districts. Welcoming the farmers and the women into the inclusive preview would address 85 per cent of the challenges.”

The choice is basically between an inefficient subsidy regime and an efficient cash transfer. There is however several challenges involved in implementing such a radical plan. Key among them is that of food security.

“Our concern should also be centered on providing for the basics like health, nutrition and education. UBI may prove inadequate in the absence of widespread reforms as the poor may not be able to buy themselves out of poverty. I don’t see the UBI as a cost. Actually, poverty is incredibly expensive. The intangible costs are much more,” Singh adds.