Sikkim to roll out Universal Basic Income

Note4students

Mains Paper 3: Economy | Inclusive growth & issues arising from it.

From UPSC perspective, the following things are important:

Prelims level:  Universal Basic Income

Mains level: Debate surrounding Universal Basic Income


News

  • Sikkim will be the first state to roll out Universal Basic Income (UBI) by 2022 and has started the process to introduce the unconditional direct cash transfer scheme.

Background

  1. The 2017 Economic Survey had flagged the UBI scheme as a conceptually appealing idea and a possible alternative to social welfare programmes targeted at reducing poverty.
  2. It has been tested even in India, debated within the Finance Ministry as early as 2017.
  3. It has been tried in Gujarat, Madhya Pradesh and tribal belts with fairly large samples and it has shown it works.

What is UBI?

  1. A UBI would mean every single individual, regardless of their identity or economic status, is guaranteed a monthly income, transferred directly into their bank account by the government every month.
  2. It has three key components: universality, unconditionality and agency – the last condition as a way to give people a choice in how to spend the transferred money.

How will it be financed?

  1. The successful implementation of the hydropower projects by Sikkim has made it a surplus power generating state.
  2. The state produces 2200 MW and it will go up to 3000 MW in the next few years.
  3. The state’s requirement is only 200-300 MW and the rest goes to power trading firms.
  4. This money will be utilized by UTI and it will be for everyone and every household.
  5. The idea is to subsume other subsidies and allowances in order to provide a particular amount every month to people.

Feasibility Check

  1. Sikkim has a literacy rate of 98 per cent and its monthly per capita expenditure in rural areas is Rs 1,444.06 and it is Rs Rs 2,538.11 for urban areas.
  2. The BPL percentage has come down from 41.43% in 1994 to 8.19% in 2011-12.
  3. The state will also restructure some social schemes and the “skewed” tax structure to find more resources.
  4. With tourism being another source of revenue for the state – the state gets around 2.5 million tourists a year –there could be some cess in future to generate additional resource to implement the scheme.

Also refer:

Should India adopt Universal Basic income Model

North-East India – Security and Developmental Issues
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