A Basic Income for Indians: Desirability and Feasibility

Abstract

While India spends about 5% of its GDP on social welfare, the bulk of this spending does not reach the poorest. Even absent corruption, which creates important leakages in the distribution system, the schemes poorly reach their targets. With the help of the Unique Identification Authority of India (UIDAI) and its biometric system Aadhaar, the central government is improving the efficiency of current schemes. However, the welfare system remains very costly and inefficient. To overcome these problems as well as for conceptual reasons, the development of nconditional cash transfers (UCT) have been proposed. Contrarily to job guarantee program (MGNREGS) or to food, fuel or fertilizer subsidies, UCT provide cash to their beneficiaries. In contrast with conditional cash transfers (CCT), such as free mid-day meals or the maternity benefit program, basic income —a type of UCT— does not target a specific population. What would be the advantages and drawbacks of a basic income as compared to existing schemes? How does empirical evidence support arguments in favor or against a basic income? What is the scope for a basic income, given the financial capacity of the State and the available technology? These questions will be addressed in turn, in order to assess the potential for this ambitious policy.