NEW DEHLI — Against a longstanding legacy of social and economic disparity, Indian leaders are increasingly turning to state-led programs in their recent efforts to combat poverty. As the 2019 national election campaigns ramp up, each candidate seems determined to outdo their opponents with ambitious welfare promises that could set the table for a large-scale experiment on universal basic income in India.
Welfare as a Campaign Tool
Since the early 2000s, India’s economy has soared, securing more tax revenue for welfare programs. The most significant development took place in the build up to the 2014 general election, when the ruling party passed a bill that secured food access as a legal right and laid the groundwork for “the world’s largest welfare program.”
However, four years into Narendra Modi’s premiership, questions are being raised in spite of impressive policy moves. While India is still enjoying high economic growth, little of that wealth is being passed on to the poor — in fact, the disparity is getting worse. Finding himself on shaky ground when last year his re-election seemed certain, Modi unveiled plans to distribute large cash handouts to India’s farmers in his February 2019 budget proposal.
Under the proposal, all farming households with less than five acres will receive 6,000 rupees per year. At approximately $85, this additional income will make a substantial difference to those living within the margins of poverty. Just days before, Modi’s chief rival, Rahul Gandhi of the Congress Party tweeted that his party is “committed to a minimum income guarantee” if elected to power in April, signaling a campaign war over who can deliver the most enticing welfare promises. Details on how the party would deliver on this ambitious promise have yet to be laid out.
Universal Basic Income: A Hot Topic
Universal income schemes are a hot topic around the globe. In the U.S., Democratic presidential candidate Andrew Yang has listed a $12,000 annual basic income pledge as a key piece of his platform. Finland concluded a pilot scheme for universal income earlier this year to mixed results, while a change of leadership forced Ontario to cancel its UBI experiment in mid-2018.
Universal income schemes are not, however, limited to social experiments in affluent nations. African states have conducted their own “cash hand-out” programs with much success for more than a decade. Analysis of African hand-out programs has found that overall they help to lift people from dire poverty and stimulate the economy. These results suggest income schemes could yield similar success in India, where the conditions of the rural poor closely resemble those of sub-Saharan Africa.
“Hand-out” schemes are essentially UBI programs limited to a targeted demographic—usually geographic, economic or employment-based. A developing country like Kenya cannot afford to dish out cash payments to every single citizen, but it can afford to raise 250,000 targeted households from dire poverty through small monthly payments.
What’s Next for Universal Basic Income in India?
If it comes to fruition, Modi’s agricultural hand-out program will be among the most ambitious government income schemes anywhere to date and could lay the groundwork for a full-scale universal income program in India. The Wall Street Journal reports that a senior fellow of the South Asia Program at the Carnegie Endowment for International Peace recently remarked that, “[UBI in India] has now become an issue of when, not if.”
While many of India’s recent efforts at eliminating poverty through welfare have been hampered by institutional and infrastructural inefficiencies, one of the promises of UBI is that it can streamline unwieldy benefit programs into a single sum. For a country as large and diverse as India, this could be a welcome step.
– Jamie Wiggan