Basic Income Scheme/Minimum Guarantee Scheme

Jan. 29, 2019

Former Chief Economic Adviser Arvind Subramanian had said that the Centre and the States should launch a basic income scheme which guarantees minimum cash transfers to all except the well-off in rural areas.Hence, he has termed this scheme as the Quasi-universal basic rural income (QUBRI) scheme.

Key Highlights:

  • According to him, the scheme should not be funded out of the reserves of RBI but through replacement of existing farm and fertilizer subsidies.

  • Also, the transfer would not be to all rural households but all except the demonstrably well-off thereby making it quasi-universal.

  • According to him, QUBRI scheme would be better than Telangana’s RythuBandhu initiative and Odisha’s Kalia scheme, as it will be progressive and go further in including non-farm rural households.

Economic calculation behind this scheme:

  • An annual transfer of about Rs 18,000 or Rs 1,500 per month per household would cover 75 % of the rural population at a total fiscal cost of about 1.3 % of GDP or Rs 2.64 lakh crore in 2019-20 prices.

  • This can be funded equally by the Centre and the states through cutting down of existing farm subsidies and pruning Centrally Sponsored Schemes.

  • Hence, it will not create any additional burden on exchequer.

Rationale behind this step:

  • Agrarian crisis is not limited to the agriculture only. It has depressed the entire rural

  • So, making the focus rural might be more effective at addressing the agrarian stress.

  • Such a scheme would be better than loan waivers given by the government which are essentially regressive as they mainly benefit rich farmers.

Source : The Hindu and Indian Express