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
- 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.
- 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.
- It has been tested even in India, debated within the Finance Ministry as early as 2017.
- It has been tried in Gujarat, Madhya Pradesh and tribal belts with fairly large samples and it has shown it works.
What is UBI?
- 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.
- 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?
- The successful implementation of the hydropower projects by Sikkim has made it a surplus power generating state.
- The state produces 2200 MW and it will go up to 3000 MW in the next few years.
- The state’s requirement is only 200-300 MW and the rest goes to power trading firms.
- This money will be utilized by UTI and it will be for everyone and every household.
- The idea is to subsume other subsidies and allowances in order to provide a particular amount every month to people.
- 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.
- The BPL percentage has come down from 41.43% in 1994 to 8.19% in 2011-12.
- The state will also restructure some social schemes and the “skewed” tax structure to find more resources.
- 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.