India: Could a basic income eradicate poverty?
It’s election season in India, said Sonal Varma and Aurodeep Nandi in the Financial Express, and that means the major parties have begun the “game of competitive populism.” The center-left, opposition Congress Party began tossing out promises of freebies in December, with party leader Rahul Gandhi hinting that repayments on farm loans would be waived if Congress took power. The ruling Hindu nationalist Bharatiya Janata Party, having been pummeled in recent local elections in rural areas, quickly countered with its own agricultural handout. It said that any farming family with less than 5 acres of land would get about $84 a year, enough to lift many out of poverty. Some 120 million farming families would benefit from that program, at a cost of perhaps $10 billion a year. Congress has now come back with an even more radical offer of a “minimum income guarantee” for all poor Indians—rural and urban. Under the program, families below a certain income level would receive cash payments to push them out of poverty. If the target is just the bottom 5 percent of Indians, who earn less than $2 a day, we’re talking some 70 million people. But if Gandhi uses a broader definition of poverty, that could include some 275 million people and cost hundreds of billions a year.
There’s a better way, said Bharat Jhunjhunwala in The Hans India, and it’s affordable. What India needs is a universal basic income paid to every citizen. Making the handout universal does away with both the need for costly administrative oversight to determine who qualifies and the possibility of corruption in distribution. “My quick calculations” show that eliminating the competing welfare apparatuses we have now—including subsidies for food, fuel, and farmers—and replacing them with handouts would boost all incomes with “no additional burden on the central government.”
That’s a pipe dream, said Indian economist Dhiraj Nayyar in Bloomberg.com. I can’t name a single Indian welfare program that has ever been abolished. Realistically, the chances of any Indian government cutting “India’s gigantic maze of welfare programs” is “negligible, probably zero.” Any cash-transfer scheme “will thus likely be a top-up over everything else,” an expensive boondoggle that would push the country into a crippling recession.
Yet the idea has worked wherever it has been tried, said Ankita Dwivedi Johri in the Indian Express. Pilot programs in 2011 in a West Delhi slum and nine villages showed that “the emancipatory value of basic income is several times greater than its monetary value.” Participants, who received about $14 a month, no longer had to stand in long lines at government-run facilities to receive subquality rations—they just bought what they wanted. “For the first time, I could save some money,” said recipient Leela, a widow. “I got my grandchildren enrolled in tuition classes.” Isn’t that what we want for all Indians?