Universal Basic Income Current Affairs - 2019

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SBI Ecowrap Report recommends Unconditional Cash Transfer to Farmers

The SBI Ecowrap report recommends the government to opt for the unconditional cash transfer to farmers to alleviate agrarian distress rather than Universal Basic Income (UBI) scheme.

Why does the SBI report recommend unconditional cash transfer?

The report has recommended the unconditional cash transfer based on the following reasons:

  • Currently, it is not feasible to implement Rythu Bandhu Scheme at the national level because the land data is yet to be digitized in several states including Jharkhand, Bihar, Gujarat, and Tamil Nadu.
  • Hence the unconditional cash transfer scheme is a best available option as it will be more equitable (on a per farmer basis) with a meaningful impact and once the problems are ironed out in terms of proper tenancy laws, then it can be made conditional.
  • The report mentions that many countries have found that UBI does not address the structural problems and is at best a solution in interregnum.
  • The report estimates various subsidy benefits the farmers are availing and suggests if a farmer is availing one or all the three modes of subsidy/supports (Crop Insurance, Interest Subsidy and Fertilizer Subsidy) then he/she will receive a minimum of Rs 5,335 to maximum Rs 10,162 per annum as cash support.
  • The report predicts that government would be required to provide cash support in the range of Rs 10,000-12,000 per annum to make it completely cash neutral and the annual cost of such a scheme is Rs 1.2 lakh crore per annum.
  • The challenge of providing cash transfer to tenant transfer would be left unaddressed under this scheme.

The study notes that there have been reports saying that the government is planning to provide direct cash support to the farmers in lieu of various farm level subsidies/support.

Sikkim to Introduce Universal Basic Income

The ruling party of Sikkim, Sikkim Democratic Front (SDF) has assured the implementation of the universal basic income in Sikkim by 2022. If things go as per plan, Sikkim would become the first state in the country to implement the Universal Basic Income (UBI).

Universal Basic Income (UBI)

Universal Basic Income (UBI) refers to a programme wherein the people are provided with a fixed amount of money irrespective of their income, resources or employment status.

Resources for Funding the UBI

The state of Sikkim aims to mobilise the resources for funding the UBI through the following avenues:

  • Sikkim is a power-surplus state. Sikkim produces 2200 MW and the requirement of the state is only 200-300 MW. The power generation capacity would further go up to 3000 MW in a few years. The revenue from the selling of the surplus power would provide extra revenue, which the government plans to divert to implement UBI.
  • Sikkim also plans to subsume other subsidies and allowances in order to provide a particular amount every month to people.

Benefits of UBI

The 2017 Economic Survey had proposed UBI as a conceptually appealing idea which could be a possible alternative to social welfare programmes targeted at reducing poverty.

The advocates of the UBI praise the concept as futuristic which will allow the people to look into the future without worrying too much about income to sustain themselves.

The pilot programmes for the UBI has been successfully implemented in the states Gujarat, Madhya Pradesh and tribal belts with fairly large samples.