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Poverty, Inclusive Growth, Universal Basic Income

Poverty and Inclusive Growth

Goal-1 of SDG – End poverty in all its forms every-where-2030 – eliminating poverty in all its dimensions such that every citizen has access to a minimum standard of food, education, health, clothing, shelter, transportation & energy.

NITI Aayog is favouring for the Tendulkar line which set poverty ratio to 21.9 % as compared to Rangarajan committee which had a higher poverty ratio of 29.5%.

To remove any criticism that many poor would be left behind if poverty line as per Tendulkar committee is adopted, NITI Aayog has underlined that it will only be used to track progress in combating poverty rather than identifying the poor for entitlements. SECC data as suggested by Saxena and Hashim committee will be used for entitlements.

Major Poverty Alleviation Programmes
  • National Food Security Act
  • Mid-day Meal Scheme
  • MGNREGA
  • Housing for All
  • Jan Dhan Yojana, Aadhaar Mobile (JAM) trinity
  • Universal basic income
  • PMUY scheme provides free LPG connections in the name of woman head of BPL household identified via SECC

 


Universal Basic Income

An income unconditionally granted to all citizens on an individual basis, without work requirement. It is a form of minimum income guarantee that is being paid irrespective of any income from other sources. UBI would have three components – Universality, Unconditionality, & Agency (citizen not a subject of government welfare programme but an agent of its own)

Concept is based on social justice principle i.e. a right to basic income i.e. a just society needs to guarantee to each individual a minimum income for a dignified life with access to basic goods.

Limitations 
  • lead to a disincentive to work – work productivity may decrease but what about inheritance then?
  • may promote spending on social evils like alcohol, tobacco etc.
  • Financial strains to government
  • Winding up some subsidies – political challenge
  • Financial inclusion not 100 % – how to do then?

 

Why Universalize? 
  • Misallocation of resources – Generally government allocates resources as per state capacity. Since richer areas have better administration, so they receive more resources than the poorer areas
  • Exclusion of genuine Beneficiaries – Because of misallocation, many poors are excluded from welfare resources. For ex. States having over 50% poor got only about 33% MNREGA funds in 2015-16.
  • By ‘Universal’ Basic Income, misallocation will be lesser & exclusion of beneficiaries will reduce
  • reduces allocation errors and administrative hassles
  • reduces leakage because income is transferred directly to beneficiary bank account
  • In a society accepting inheritance money, UBI should not be a problem
  • may be an acknowledgement of non-wage work-related contributions to the society for ex. housewife’s work
  • with food security universalization by National Food Security Act subsidy to bottom 40% has increased substantially
Although a fiscal space exists to start UBI by rolling back on some subsidies, it is politically & administratively challenging. UBI should be made universal first across easily identifiable vulnerable groups like widows, old, pregnant women etc.

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