#BQDebates: Top Development Economists Against Guaranteed Income

Congress President Rahul Gandhi promised a minimum income guarantee scheme for the poor if voted to power in the next general election. Congress leaders said a certain income level would be identified, and a family falling short of that level would be compensated the difference. They have not yet defined what the threshold will be.

BloombergQuint spoke to three leading development economists, who voiced not only skepticism, but apprehension about such moves by any government.

Price, Income, Debt Support Are All Unsustainable And Lazy Fixes

- Mihir Shah, Former Member of the Planning Commission (2009-2014) and the National Advisory Council (2012-2014)

This rush towards quick fixes like cash transfers, farm loan waivers and raising minimum support prices of rice and wheat are lazy short-cuts and not a solution to India’s very serious farm crisis.

We urgently need more resources to fix our public healthcare and education systems. Where will that money come from if we squander it in this way?

Without fundamentally altering the paradigm of agriculture and water in India, which means providing procurement support to less water intensive, less risky and less costly crops, such as millets and pulses, and also going beyond the green revolution paradigm of chemical agriculture, we cannot ensure stable and sustainable incomes for our farmers.

The reason why farmers are in distress is that the cost of cultivation has shot through the roof. Increasingly higher applications of chemical fertiliser and pesiticides are required to get the same level of output.

For the last 40 years the only crops we have procured are wheat and rice. We need to expand procurement operations for millets and pulses which are also nutritionally the much better option.

Introduce millets and pulse preparations in the mid-day meals, and the aanganwadi programmes, as also the public distribution system. If you do this, farmers have an incentive to grow these crops. Farmers respond to market signals, and we need to change the structure of incentives.

If this is done, we don’t need farm loan waivers and cash transfers, which are fiscally unsustainable and will further compromise the integrity of our already fragile banking system.

A simple way of working around this problem would be to subsidise organic fertilisers. Over dependence on the chemcial fertilisers helps only the companies, not the farmers.

The new paradigm for agriculture, where farmers are incentivised to grow nutritionally rich whole foods, in a sustainable manner, can create multiple win-wins: water security, better water quality, ecological balance, lower costs of cultivation, higher farmer incomes and better consumer health.

Against Any Variant Of A UBI

C Rammanohar Reddy, Economist and Former Editor, EPW

The idea of a universal basic income or a quasi-universal basic income has become a fashion among international economists and has been brought to India as well. I am not in favour of it.

It could work when the citizens already enjoy a basic level of services and a certain cash transfer is made to top-up income. Here, what is being thought of is to replace all or most welfare services with a variant of the UBI.

We must remember that welfare services play a certain role – in nutrition, health and education. You can quarrel about delivery but you can’t quarrel about the need.

The long-term solution for the government would be to improve the quality of welfare services and simultaneously create conditions for economic growth which delivers decent jobs for its citizens.

I am against any variant of a UBI – quasi, minimum income guarantee or a Rythu Bandhu scheme as in Telangana (which incidentally is highly regressive because the more land you own, the more you get).

You shouldn’t be looking for electoral gimmicks like offering UBI/QUBI/minimum income guarantees to win your way to office but by evading your responsibility.

An Incredibly Complicated Idea

- Jayati Ghosh, Professor of Economics, Centre for Economic Studies and Planning, JNU

If this is a move to preempt such announcements by Narendra Modi, that’s smart. But otherwise, it’s incredibly complicated to work out and implement, and should not come at the cost of providing necessary public services.