J&K makes a good start PDF Print E-mail
Tuesday, 28 March 2017 05:13
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Plan to replace subsidies with UBI for poor a great idea


Tamil Nadu is not one of India’s poorest states – with a per capita income of Rs 143,547 in FY16, it is actually the 5th or the 6th richest if you leave out the likes of Delhi and Chandigarh – but it is the top state when it comes to MGNREGA employment and got over 17% of the jobs generated under the scheme. Uttar Pradesh, in contrast, accounts for over 22% of the country’s poor but accounted for less than 8% of the MGNREGA jobs in FY16; Bihar accounts for over 13% of the country’s poor but less than 3% of the MGNREGA jobs. The same metric, unfortunately, can be multiplied across most government schemes. According to the latest Economic Survey, the most backward districts that accounted for 40% of the country’s poor in FY16 got roughly 39% of the budget allocation for the Prime Minister Gram Sadak Yojana but just 31% of the allocation on Sarv Shiksha Abhiyaan, 28% in the case of MGNREGA, 24% in the Swach Bharat Abhiyaan and 20% in the case of Mid-Day Meals. Looked at another way, the poorest set of districts accounting for 20 percent of the poor access only 15 percent of the resources, 40 percent of the poor only 29 percent of the resources and 50 percent of the poor about 38 percent of the resources from the scheme.


While there is undoubtedly a lot of leakage in most government schemes, and the government response is to make the use of Aadhaar mandatory to check the leakages, this cannot work beyond a point. What is critical in most schemes is really the ability of the state government to get its act together, to be able to run credible programmes to take advantage of what the central government is doling out – if the administration in Uttar Pradesh can’t set up enough MGNREGA sites, using or not using Aadhaar is not really the issue. The best way out, naturally, is to simply distribute cash to all the poor in each state. This is where, as this newspaper reported last week, Jammu & Kashmir may just be off to a flying start. Even before the central government began talking of Universal Basic Income (UBI) for the poor, the J&K budget made a mention of it. J&K finance minister Haseeb Drabu has already made a presentation to union finance minister Arun Jaitley to assure him that, were the centre to allow the state to use the money flexibly for a UBI for the poor, J&K will not ask for more funds. Jaitley has rightly pointed out that, in India, the political class could well want existing subsidies to continue while adding UBI on top of that. Drabu has outlined the contours of a possible UBI and, were other states to follow suit and assure the centre they are looking at replacing existing subsidies with UBI, this could be the beginning of true social equity in the country, where government – centre and state – subsidies are given on the basis of poverty, not the state’s superior ability to corner subsidies. The centre’s 950 central sector and centrally sponsored schemes, as the Survey points out, alone add up to over 5% of GDP. With UBI kind of targeting, this could substantially eliminate poverty across the country.



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