The Economic Survey of India 2016-17 presented the model for providing UBI to the poorer sections of the society. (Photo: PTI)

If voted to power in the upcoming Lok Sabha polls 2019, Congress president Rahul Gandhi promised that his party would implement minimum basic income for the poor -- a spinoff of the global concept of Universal Basic Income (UBI).

Gandhi said the dream of building a new India will only be possible by eliminating poverty. "A minimum income guarantee for every poor person is our vision and promise," he said.

UBI was first flagged in the Economic Survey 2016-17 as a conceptually appealing idea and a possible alternative to social welfare programmes.

The Congress president’s minimum income guarantee for the poor is a spinoff of the concept of UBI, which is a model for providing all citizens of the country or a geographic area with a sum of money.

What is UBI?

UBI is a fixed income provided to every adult including the rich, poor, working or idle by the government. The core idea of UBI is to eliminate poverty or at least ensure survival of individuals in the country or within a certain area/state.

It is defined by Basic Income Earth Network (BIEN) as a basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means, test or work requirement.

Does it benefit you?

The idea of UBI is not new. Several experiments and pilot project have been implemented across the world but not fully adopted by any country.

In India, however, the scheme’s scope will be limited to people belonging from economically weaker sections of the society.

The Economic Survey of India 2016-17 presented the model for providing UBI to the poorer sections of the society.

UBI for India (Formula) | How it works?

Poverty line or the estimated minimum level of income needed to sustain life was fixed at Rs 7,620 per person/annum, based on economist Suresh Tendulkar’s poverty line formula.

The survey had estimated that such a model of UBI will cost 4.9 per cent of India’s GDP in comparison to 5.2 per cent of GDP spent on all 950 central sector and centrally sub-sponsored schemes.

Under the scheme, income transfer was envisaged through direct benefit transfer to the concerned individual using Aadhaar. It was also recommended to start the scheme with women, elderly people, widows, and persons with disability.

Why India's UBI model raised questions?

The model suggested by the Economic Survey 2016-17 raised questions as Tendulkar’s poverty line grossly underestimated the level of poverty per day among poor Indians.

While Tendulkar’s version fixed 22 per cent of the population as poor, C Rangarajan later pegged the figure of poor families at 29.5 per cent or 363 million.

The per capita rural spending level was also revised from Rs 27.2 in 2012 to Rs 32 in 2014-15 while it was changed to Rs 47 from Rs 33.3 for urban areas.

Issues with UBI in India

Despite Rangarajan’s assessment, the Niti Aayog’s Task Force on Elimination of Poverty’ report supported Tendulkar’s formula, adding that Rangarajan’s formula has not been officially accepted.

Justifying its argument, Niti Aayog said, "The sole objective behind the poverty line being to track progress in combating extreme poverty, it makes more sense to it at a level just sufficient for accessing the basic necessities of life."

"Setting the poverty line at a level at which the individual has a comfortable existence will not allow us to assess the progress in the fortunes of those in abject poverty," it added.

Another argument is that UBI does not focus on long-term benefits.

Some of the 950 central sector and centrally sub-sponsored schemes include many long-term schemes for the overall development of human beings.

Many argue that an inadequate cash transfer would not be able to replace such benefits.

India already has a UBI-like scheme

While not many may know, India already has a UBI-like scheme, but on a significantly smaller scale.

Under the National Social Assistance Programme (NSAP) since 1995, the central government gives pensions to the elderly, widows and disabled.

The Centre’s contribution is between Rs 200 and Rs 300.

India’s income diversity makes implementation even more difficult. It has not been tried anywhere which has the same level of income disparity like India.

Meanwhile, Indians have not had a satisfactory experience with schemes such as NSAP.

Aadhaar-based implementation could also lead to exclusion of many people from the scheme, which could have potentially life-ending consequences for poor people living in rural or urban areas.

While there are some positives like reducing government spending on a host of active schemes, the negatives can have major consequences, especially in the well-being of poor people.