New Delhi: Jammu and Kashmir (J&K) became the first to commit to a “Universal Basic Income" to all citizens living below poverty line by providing direct benefit transfers.

Presenting his third budget and the first by any state for 2017-18, J&K finance minister Haseeb Drabu said a UBI instead of a plethora of social sector schemes will not only eliminate leakages but also dramatically reduce the cost of delivery.

The idea is consistent with the finance minister’s plans to recast the state budget to focus on outcomes. Accordingly, Drabu announced a new framework for the budget.

“(Under the existing system) The spending ministries and the political executive have limited roles in this phase. The result is very little ownership of the allocations done and the trade offs made. I propose to change the system," he said.

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However, Drabu said the actual rollout of Universal Basic Income will be subject to procedural clearances.

“I want to leave the seeds of a thought on how to transition from running social welfare schemes to a well laid out social security system. It is not possible for me to do it now and on my own; it will need not only concurrence but help from the central government as well," Drabu said in his budget speech.

The idea of a Universal Basic Income has been gaining currency among economists. Chief economic adviser in the finance ministry Arvind Subramanian in September said UBI is an “exciting idea" promising to further elaborate his thoughts in the upcoming Economic Survey scheduled to be presented on 31 January in Parliament.

There is speculation about finance minister Arun Jaitley also incorporating the scheme in the Union budget to be presented a day later on 1 February.

Himanshu, an associate professor at the Jawaharlal Nehru University and a Mint columnist said what is proposed by Drabu is targeted cash transfer and not Universal Basic Income. “Universal Basic Income is an European concept and promises a minimum income guarantee to everybody over and above the social sector benefits. If governments here cuts down existing subsidies on health, education, its cost will significantly go up, making it unaffordable for all," he added.

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Drabu said till such time that he is able to provide a safety net for all the people living “below the poverty line", he has created a social security system for all the construction workers in the state.

J&K Bank will link all the bank account numbers of construction workers registered with the J&K Building and Other Construction Workers Welfare Board. The construction workers will be able to avail of cash credit facility up to Rs10,000 in one year along with inbuilt life, health and accident insurance.

“This step forward shall have a positive multiplier effect in this section of society as this will help the workers to live a dignified life and shall help them in actively raising the standard of living of their families," Drabu said.

Drabu also proposed convergence of more than two dozen student scholarship schemes under one umbrella and make it Aadhaar-linked to avoid duplication.

The J&K budget also conditionally infused Rs532 crore as equity capital in the state-owned Jammu and Kashmir Bank; the state government inserted a caveat that the bank will have to guarantee accountability and penal action against those breaking norms.

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