Union Budget 2017: 5 things to know about Universal Basic Income, 'free money' for all Indians

The idea of providing Indians with a universal basic income is being seriously explored by the Narendra Modi government, it was revealed less than a day before Union budget 2017 is due to be presented in Parliament. Arvind Subramanian, the chief economic advisor at the Ministry of Finance, said while presenting the government’s annual survey of the Indian economy on Tuesday that there was a strong case in India for replacing multiple welfare payments with a single income.

“It’s an idea whose time is ripe for further deliberation and discussion, and not necessarily for immediate implementation,” Subramanian reportedly said.

The survey reportedly said that a universal basic income for every citizen, irrespective of them being poor or rich, would promote social justice beside empowering the poor.

Supporters of universal basic income argue that a single direct transfer into the account of everyone would help to plug leaks in India’s massive grain-subsidy system and reduce odds of administrative efficiency in disbursing multiple subsidies.

The Modi government has already indicated that it is willing to adopt the system of single minimum income, as it overhauled previous system of grains transfer and opted for direct cash transfer into bank accounts of beneficiaries in the wake of the national election win in 2014.

Here are five things you may want to know about the idea of universal basic income:

  • The idea of universal basic income is enjoying renewed popularity world over these days. A report in Wall Street Journal pointed out that Finland launched the project on trial basis last year, with Canada and the Netherlands also preparing their own versions of the economic experiment that may well be rolled out soon.
  • According to calculations,the total cost of providing basic universal income to even 75 percent of India’s population would work out 4.9 percent of India’s gross domestic product (GDP). Every beneficiary would get Rs 7,620 per year as per the same calculation.
  • Supporters of the move also say that universal income would pull more Indians toward the formal banking system. According to an estimate, nearly one-third of Indians remain unbanked despite a recent surge in new bank account openings.
  • Inadequate banking infrastructure is being seen as a major challenge in implementing universal income. At 20 ATMs for every 100,000 people in , the ATM density in India is one of the lowest in the world.
  • There were rumours in the wake of the demonetisation exercise that the Modi government was mulling a welfare system on the lines of universal income, largely due to massive cash influx into government coffers due to cash ban. Narendra Modi, in his speeches since, has neither backed nor denied the idea.

(Source: Youtube/PIB India)