The Economic Survey 2016-17 released on January 31, has recommended an Universal Basic Income (UBI) concept as an alternative to the various social welfare schemes to eliminate poverty. The survey stated that the UBI is a powerful idea and now there is need of serious discussion on it even though time is not ripe for its implementation.
The survey further stated that the concept of UBI reduces poverty to 0.5 per cent and would cost 4-5 per cent of GDP, based on an assumption that those in the top 25 percent income bracket do not participate. Further it noted that the existing middle class subsidies and food, petroleum and fertilizer subsidies cost about 3 per cent of GDP.
The survey has said that the UBI, based on the principles of universality, unconditionality and agency, is a conceptually appealing idea, though it also pointed that a number of implementation challenges lie ahead of it. Further, based on a survey on misallocation of resources for the six largest central sector and centrally sponsored sub-schemes (except PDS and fertilizer subsidy) across districts, the economic survey has said that the districts with most requirements are precisely the ones where state capacity is the weakest and this suggests that a more efficient way to help the poor would be to provide them resources directly, through a UBI.